The effects of interaction between location of birth and location of study on immigrant workers' wages in Canada

Previous studies have suggested that the wage gap between immigrants and the native-born can be accounted for by human capital factors, including education and work experience and, more importantly, where they are acquired. However, current Canadian economic immigration policies do not consider either a potential immigrant's location of birth or location of study. In this paper, we attempt to study the effects of the interaction between a worker's location of birth and location of study on his or her wage with data from the 2011 National Household Survey. Using both OLS and median regression LAD, performed in STATA, we show that (1) the location of birth is not generally indicative of a workers earning potential; (2) without the interactions, all foreign degrees lead to a lower wage compared with Canadian peers, with a U.S. degree being the least punitive; (3) a U.S. degree would lead to a wage premium for workers from some countries; and (4) when a worker from a nontraditional foreign student source country receives a degree in a culturally and geographically distant location, there is a significant wage premium.