Understanding the Economic Integration of Immigrants: A Wage Decomposition of the Earnings Disparities between Native-Born Canadians and Recent Immigrant Cohorts
2. Conceptualizing the Earnings Gap of Immigrants and Non-immigrants
3. Data Sources
5. Discussion of Results
5.1. Descriptive Statistics
|Mean or Proportion||Mean or Proportion|
|Visible minority status|
|Other visible minority||—||0.26|
|Census Metropolitan Area (CMA)|
|Non-CMAs (rural areas)||0.36||0.05|
|Number of children|
|One or more||0.38||0.51|
|Age at migration||—||28|
|Years in Canada||—||10.26|
|Highest level of schooling|
|High school diploma||0.24||0.20|
|Less than high school||0.13||0.10|
|Ethnic Identity (Behavioral)|
|Language spoken at home (family)|
|Vote in past election|
|Not applicable (not Canadian citizen)||—||0.37|
|No religious affiliation||0.18||0.18|
|Number of ethnic friends|
|Most of them||0.23||0.35|
|About half of them||0.14||0.22|
|A few of them||0.37||0.24|
|None of them||0.17||0.07|
|Ethnic Identity (Attitudinal)|
|Sense of belonging (ethnic)|
|1. Not strong at all||0.16||0.06|
|5. Very strong||0.25||0.36|
|Trust people (neighborhood)|
|1. Cannot be trusted at all||0.02||0.03|
|5. Can be trusted a lot||0.26||0.22|
|Yearly earnings (2002 dollars)||$39,189||$31,020|
5.2. Regression Results
|Variable||Native-Born Model||Immigrants Model|
|Visible minority status||***|
|Other visible minority||—||—||0.06||0.051|
|Census Metropolitan Area||***||**|
|Non-CMAs (rural areas)||−0.28||0.043||***||−0.07||0.071|
|Number of Children||***|
|One or more||0.12||0.026||***||0.06||0.033|
|Age at migration||—||—||0.00||0.002|
|Years in Canada||—||—||0.03||0.003||***|
|Highest level of schooling||***||***|
|High school diploma||0.19||0.041||***||0.17||0.057||**|
|Less than high school||ref||—||ref||—|
|Ethnic Identity (Behavioral)|
|Language spoken at home (family)||***|
|Vote in past election||*||*|
|Not applicable (non-citizen)||—||—||−0.10||0.038||**|
|No religious affiliation||0.06||0.022||**||−0.03||0.043|
| || || || || || || |
| || || || || || || |
|Number of ethnic friends||**|
|Most of them||0.02||0.044||0.04||0.072|
|About half of them||0.05||0.035||0.11||0.064|
|A few of them||0.10||0.039||**||0.18||0.065||**|
|None of them||0.07||0.037||*||0.16||0.063||*|
|Ethnic Identity (Attitudinal)|
|Sense of belonging (ethnic)||***|
|1. Not strong at all||0.10||0.042||*||0.12||0.068|
|5. Very strong||ref||—||ref||—|
|Trust people (neighborhood)||**|
|1. Cannot be trusted at all||−0.19||0.054||***||−0.18||0.084|
|5. Can be trusted a lot||ref||—||ref||—|
| ||N = 9,515 |
Adjusted R-square = 0.18
|N = 1,755 |
Adjusted R-square = 0.30
5.3 Regression Decomposition Results
|Ethnic identity/attachment (behavioral)||0.051|
|Ethnic identity/trust (attitudinal||−0.013|
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- 1In Canada, three major occurrences have been identified as empirically important . The first, which accounts for about one-third of the decline, has to do with changes in the characteristics of immigrants following the shift in source countries in the 1960s and associated changes in mother tongue. Another one-third is attributed to declining returns to foreign work experience among non-European immigrants. The final third is linked to a general decline in labor market outcomes for new entrants into the labor force, where immigrants are treated as new entrants. Similar reasons have been provided for the deterioration of wages in the U.S. [29,30,31].
- 2Originally devised by the Canadian government, visible minority is a socially constructed term that is used to refer to groups that are distinctive according to their race, color or “visibility.” (See , p. 1041).
- 3However, in regard to our earlier discussion of agency, language use and discrimination are quite distinct. While immigrants are generally able to decide whether to adopt and use an official language, discrimination is largely under the control of members of the host society.
- 4The research and analysis presented are based on data from Statistics Canada; however, the views expressed are those of the authors and do not represent the views of Statistics Canada.
- 5We included immigrants of the two most recent cohorts, those arriving between 1981 and 1991 and those arriving between 1992 and 2001. If immigrants of earlier cohorts are included in the analysis, there would be very little wage gap to explain.
- 6Separate models for males and females were initially run. Because the main findings from these models were similar, a dichotomous variable for sex was instead used to measure earnings differences between males and females within the immigrant and Canadian-born populations.
- 7The visible minority variable distinguishes among the three largest groups of visible minority immigrants—blacks, Chinese and South Asians (see ). Note that Statistics Canada defines “visible minority” as individuals who are “non-Caucasian in race or non-white in color and who do not report being Aboriginal” .
- 8We include the level of schooling variable instead of years of education, because previous research suggests that level of schooling is a better measure of educational achievement, as it also captures the qualitative dimension of education that is associated with acquiring specific postsecondary credentials (see [13,57]).
- 9The unexplained component consists of unmeasured/unobserved characteristics.
- 12Proportions are used for categorical variables.
- 13Unfortunately, we cannot decompose the residual component, because the residual decomposition is affected by the choice of reference category (see ). However, this is less of a concern for our research, as our main interest is in the explained component.
- 14All estimates are obtained using weighted data.
- 15We report the means for age, because the age distribution of full-year workers employed full-time between 24 and 65 in our sample is approximately normal.
- 16In Oaxaca’s  decomposition comparing males and females, he included “number of children” as a variable for females, but not for males.
- 17A very small number of native-born respondents who reported speaking a non-official language at home were removed from the analysis.
- 18For immigrants, this variable is divided into three categories: (1) did vote in a previous election; (2) did not vote in a previous election; and (3) not applicable. A cross tabulation of this variable (not provided here) by citizenship status reveals that virtually all of the respondents in the last category are not Canadian citizens.
- 19There were too few native-born respondents who reported a non-Christian affiliation to form a separate category. Therefore, we excluded these respondents from the analysis.
- 20While we routinely report significance tests for both groups, this is done only for consideration. We advise our readers that it is not appropriate to use tests of statistical significance to compare the relative effects of the variables across models, particularly since the sample size for immigrants is considerably smaller than the sample size for native-born respondents. Moreover, the distributions of responses for many of the independent variables are not uniform across the two groups.
- 21It should be noted, however, that age likely has a non-linear relationship with earnings.
- 22When not otherwise stated, the effects of all coefficients are to be interpreted as controlling for all of the other variables in the models.
- 23Initially, we also included a region of schooling variable in the regression model for immigrants. However, the effect of this variable was not statistically significant. Thus, we removed this variable from the final model, so that the imprecisely measured estimates would not affect the reliability of the decomposition analysis.
- 24However, Nadeau and Seckin’s  inclusion of both language spoken at home and knowledge of official language results in an estimate for language spoken at home that is lower than our estimate. The higher estimate in our model may be due to the language spoken at home variable accounting for some of the effect of individuals’ official language knowledge.
- 25Significance tests for variables are obtained using the F-test.
- 26We also initially included a subjective measure of discrimination (at work) obtained from a question where the respondents’ were asked to report whether they had experienced discrimination at work (yes, no). This variable was not significant for either group and was removed from the final model, so that the estimates would not compromise the decomposition analysis.
- 27The results are based on comparisons of geometric means.
- 29However, Hou and Picot  found that visible minority neighborhood enclaves have very little negative impact on immigrants’ labor market performance. Thus, the implications of excluding such measures may not be as strong as we expect.
© 2013 by the authors; licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution license (http://creativecommons.org/licenses/by/3.0/).
Frank, K.; Phythian, K.; Walters, D.; Anisef, P. Understanding the Economic Integration of Immigrants: A Wage Decomposition of the Earnings Disparities between Native-Born Canadians and Recent Immigrant Cohorts. Soc. Sci. 2013, 2, 40-61. https://doi.org/10.3390/socsci2020040
Frank K, Phythian K, Walters D, Anisef P. Understanding the Economic Integration of Immigrants: A Wage Decomposition of the Earnings Disparities between Native-Born Canadians and Recent Immigrant Cohorts. Social Sciences. 2013; 2(2):40-61. https://doi.org/10.3390/socsci2020040Chicago/Turabian Style
Frank, Kristyn, Kelli Phythian, David Walters, and Paul Anisef. 2013. "Understanding the Economic Integration of Immigrants: A Wage Decomposition of the Earnings Disparities between Native-Born Canadians and Recent Immigrant Cohorts" Social Sciences 2, no. 2: 40-61. https://doi.org/10.3390/socsci2020040