Evaluating the Source of Low Returns to Immigrants’ Foreign Experience and Credentials in Canada: Problems with Recognition or Reflection of Productivity? Natalya N. Dygalo University of Saskatchewan November 19, 2008 Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
The Question: Low returns to immigrants’ foreign experience and credentials: evaluating 2 explanations ◮ 1. Inefficient foreign credentials recognition Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
The Question: Low returns to immigrants’ foreign experience and credentials: evaluating 2 explanations ◮ 1. Inefficient foreign credentials recognition ◮ 2. Reflect labour markets’ fair assessment of the relative productivity between workers with Canadian and foreign credentials Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
The Issue: Low returns to immigrants’ foreign experience and credentials: ◮ Ferrer and Riddell (2008), Table 5C: total returns to education of immigrants from Europe, Asia and South America relative to native born are 40-55% for high school, 60-66% for U. Bachelor’s Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
The Issue: Low returns to immigrants’ foreign experience and credentials: ◮ Ferrer and Riddell (2008), Table 5C: total returns to education of immigrants from Europe, Asia and South America relative to native born are 40-55% for high school, 60-66% for U. Bachelor’s ◮ Green and Worswick (2004): returns to foreign experience are close to zero in many specifications for entry cohorts starting in 1990-92 Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
The Issue, continued: ◮ Pendakur and Woodcock (2008): wage diff between recent immigrants (less than 10 years) and native born male workers: white -7%; visible minority -31% Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
The Issue, continued: ◮ Pendakur and Woodcock (2008): wage diff between recent immigrants (less than 10 years) and native born male workers: white -7%; visible minority -31% ◮ Pendakur and Woodcock (2008): wage diff between non-recent immigrants (more than 10 years) and native born male workers: white -7%; visible minority -19% Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
Contribution to existing research: ◮ Existing research: relative wages between workers with foreign and Canadian experience, education, credentials Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
Contribution to existing research: ◮ Existing research: relative wages between workers with foreign and Canadian experience, education, credentials ◮ No research on productivity comparisons Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
Contribution to existing research: ◮ Existing research: relative wages between workers with foreign and Canadian experience, education, credentials ◮ No research on productivity comparisons ◮ This paper: compares productivity Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
Objectives of this project: More direct productivity comparisons between: ◮ Canadian- and foreign-born workers Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
Objectives of this project: More direct productivity comparisons between: ◮ Canadian- and foreign-born workers ◮ Workers with Canadian and foreign experience Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
Objectives of this project: More direct productivity comparisons between: ◮ Canadian- and foreign-born workers ◮ Workers with Canadian and foreign experience ◮ Workers with Canadian and foreign education, credentials Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
Objectives of this project: More direct productivity comparisons between: ◮ Canadian- and foreign-born workers ◮ Workers with Canadian and foreign experience ◮ Workers with Canadian and foreign education, credentials ◮ Foreign-born workers just after entry and workers with Canadian experience (productivity basis for the ”entry” effect) Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
Contribution to policy debates I (CLSRN objective) ◮ Honourable Diane Finley, (former) Minister of Citizenship and immigration,”[t]oo many newcomers can’t get jobs they have been trained for. That’s a terrible waste, for them and for the country” Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
Contribution to policy debates II (CLSRN objective) ◮ Foreign Credentials Referral Office (FCRO). One of the objectives of the approximately 320 FCRO outlets is ”increasing employer awareness of the process for, and benefits of, hiring internationally trained and educated professionals” Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
Contribution to policy debates III (CLSRN objective) ◮ Still unaddressed issue: to what extent can Canadian employers treat foreign credentials as Canadian equivalents? Measuring relative productivity between Canadian and foreign experience may have important implications for policy Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
Measuring relative productivity between Canadian and foreign-born workers: method and data ◮ Method: production functions with relative productivities as estimated parameters Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
Measuring relative productivity between Canadian and foreign-born workers: method and data ◮ Method: production functions with relative productivities as estimated parameters ◮ Primary data source: Workplace and Employee Survey (WES) 1999-2005 plus selected information matched from CANSIM II Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
Objectives of this presentation: ◮ Placement of the project in academic literature Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
Objectives of this presentation: ◮ Placement of the project in academic literature ◮ Presentation of the method (details) Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
Objectives of this presentation: ◮ Placement of the project in academic literature ◮ Presentation of the method (details) ◮ Description of data work Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
Labour Economics Literature I: ◮ Ferrer and Riddell (2008) - wage returns to Canadian/ foreign experience, education, credentials Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
Labour Economics Literature I: ◮ Ferrer and Riddell (2008) - wage returns to Canadian/ foreign experience, education, credentials ◮ Ferrer, Green, and Riddell (2006) - literacy scores Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
Labour Economics Literature II: ◮ Green and Worswick (2002) - differential returns to Canadian and foreign experience Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
Labour Economics Literature II: ◮ Green and Worswick (2002) - differential returns to Canadian and foreign experience ◮ Sweetman (2003) - adjustment for education quality in the country of origin (international test scores) Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
Back to this project: measuring relative productivity - challenges ◮ Relative productivity between Canadian and foreign-born workers Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
Back to this project: measuring relative productivity - challenges ◮ Relative productivity between Canadian and foreign-born workers ◮ Individual worker productivity measures would be preferred but are unattainable Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
Back to this project: measuring relative productivity - challenges ◮ Relative productivity between Canadian and foreign-born workers ◮ Individual worker productivity measures would be preferred but are unattainable ◮ Frequently used approach in economics: coefficients in a production function specification Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
Relative productivity from production functions was used to measure: ◮ relative productivity by age group Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
Relative productivity from production functions was used to measure: ◮ relative productivity by age group ◮ relative productivity between males and females Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
Relative productivity from production functions was used to measure: ◮ relative productivity by age group ◮ relative productivity between males and females ◮ many other studies such as the productivity of training Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
Model: a non-technical overview ◮ Ideal experiment: almost identical firms Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
Model: a non-technical overview ◮ Ideal experiment: almost identical firms ◮ Firms have only one difference: the proportion of workers with foreign and Canadian high school equivalent education Natalya N. Dygalo Productivity: Foreign vs Canadian Credentials
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