The Human Capital Model of Selection and the Long-run Economic Outcomes of Immigrants

In Canada, the selection of economic immigrants throughout the 1990s and 2000s was based largely on the human capital model of immigration. This model posits that selecting immigrants with high levels of human capital is particularly advantageous in the long run. It is argued that higher educational levels allow immigrants to both bring the skills needed in a "knowledge-based economy" and, perhaps more importantly, better adjust to both cyclical and structural changes in the labour market than immigrants with lower educational levels. This paper examines the trends in the earnings advantage that more highly educated immigrants hold over less educated immigrants by immigration class. The focus is on three questions. First, did the well-documented decline in entry earnings observed over the last quarter-century vary by immigrant educational level and by admission class? Second, have there been significant shifts across recent cohorts in the economic advantage that more highly educated immigrants hold over their less educated counterparts, both at entry and in the longer run? Third, and most importantly, does the relative earnings advantage of more highly educated immigrants change with time spent in Canada, that is, in the longer run?