Immigrant Characteristics, the IT Bust, and Their Effect on Entry Earnings of Immigrants

Using administrative data, this paper asks (1) whether the changing characteristics of immigrants, notably the rise in the share with university education and in the "skilled economic" immigrant class, contributed positively to immigrant entry earnings during the 1990s, and (2) whether the entry earnings of immigrants improved after 2000, and if not, why not. We find that, through the 1990s, the rising number of entering immigrants with university degrees and in the skilled economic class did little to improve earnings at the bottom of the earnings distribution (and reduce poverty rates among entering immigrants), but the changes did increase earnings among immigrants at the middle and top of the earnings distribution. The increasing numbers of highly educated at the bottom of the earnings distribution were unable to convert their education and "skilled class" designation to higher earnings: they found themselves with low incomes. These outcomes may be related to language, credentialism, education quality, or supply issues, as discussed in the paper. We find that from 2000 to 2004, the entry earnings of immigrants renewed their slide, but for reasons that differed from the standard explanations of the earlier decline. Much of the fall after 2000 was concentrated among immigrants intending to practice in the information technology (IT) or engineering occupations. This coincided with the IT downturn, which appears to have significantly affected outcomes for these immigrants, particularly the men. Following the significant increase in supply in response to the call for more high-tech workers in the late 1990s, the large numbers of entering immigrants were faced with the IT downturn.