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An Explanation for the Lower Payoff to Schooling for Immigrants in the Canadian Labour Market

Author

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  • Chiswick, Barry R.

    (George Washington University)

  • Miller, Paul W.

    (Curtin University)

Abstract

This paper examines the difference between the payoffs to schooling for immigrants and the native born in Canada, using 2001 Census data. Analyses are presented for males and females. Comparisons are offered with findings for the US. The paper uses the Overeducation/Required education/Undereducation framework (Hartog, 2000) and a decomposition developed by Chiswick and Miller (2008). This decomposition links overeducation to the less-than-perfect international transferability of immigrants' human capital, and under-education to favourable selection in immigration. The results show that immigrants have a lower payoff to schooling because of the different effects under-education and over-education have on their earnings. The effects of under-education, or selection in immigration, are, however, twice as large as the effects of over-education, or limited international transferability of human capital. Favourable selection in immigration appears to be less important in Canada than in the US, where it predominates among the least educated.

Suggested Citation

  • Chiswick, Barry R. & Miller, Paul W., 2009. "An Explanation for the Lower Payoff to Schooling for Immigrants in the Canadian Labour Market," IZA Discussion Papers 4448, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp4448
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    References listed on IDEAS

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    1. Hartog, Joop, 2000. "Over-education and earnings: where are we, where should we go?," Economics of Education Review, Elsevier, vol. 19(2), pages 131-147, April.
    2. Chiswick, Barry R. & Miller, Paul W., 2008. "Why is the payoff to schooling smaller for immigrants?," Labour Economics, Elsevier, vol. 15(6), pages 1317-1340, December.
    3. William Fellner, 1979. "Contemporary Economic Problems, 1979," Books, American Enterprise Institute, number 918293, September.
    4. Heather Antecol & Deborah A. Cobb-Clark & Stephen J. Trejo, 2003. "Immigration Policy and the Skills of Immigrants to Australia, Canada, and the United States," Journal of Human Resources, University of Wisconsin Press, vol. 38(1).
    5. Friedberg, Rachel M, 2000. "You Can't Take It with You? Immigrant Assimilation and the Portability of Human Capital," Journal of Labor Economics, University of Chicago Press, vol. 18(2), pages 221-251, April.
    6. Baker, Michael & Benjamin, Dwayne, 1994. "The Performance of Immigrants in the Canadian Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 12(3), pages 369-405, July.
    7. Chiswick, Barry R., 1999. "Are Immigrants Favorably Self-Selected? An Economic Analysis," Working Papers 147, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.
    8. Barry Chiswick, 1999. "Are Immigrants Favorably Self-Selected?," American Economic Review, American Economic Association, vol. 89(2), pages 181-185, May.
    9. Chiswick, Barry R, 1978. "The Effect of Americanization on the Earnings of Foreign-born Men," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 897-921, October.
    10. Chiswick, Barry R. & Miller, Paul W., 2010. "Does the choice of reference levels of education matter in the ORU earnings equation?," Economics of Education Review, Elsevier, vol. 29(6), pages 1076-1085, December.
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    Cited by:

    1. Jhon James Mora & Maribel Castillo Caicedo & Gustavo Adolfo Gómez, 2022. "Migration and Overeducation of Venezuelans in the Colombian Labor Market," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 65(2), pages 503-517, June.
    2. Ivana Fellini & Raffaele Guetto & Emilio Reyneri, 2018. "Poor Returns to Origin-Country Education for Non-Western Immigrants in Italy: An Analysis of Occupational Status on Arrival and Mobility," Social Inclusion, Cogitatio Press, vol. 6(3), pages 34-47.
    3. Chiswick, Barry R. & Miller, Paul W., 2009. "ORU Analyses of Immigrant Earnings in Australia, with International Comparisons," IZA Discussion Papers 4422, Institute of Labor Economics (IZA).
    4. Pernilla Joona & Nabanita Gupta & Eskil Wadensjö, 2014. "Overeducation among immigrants in Sweden: incidence, wage effects and state dependence," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-23, December.

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    More about this item

    Keywords

    rates of return; immigrants; skill; schooling; earnings; Canada;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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