There was an interesting Statscan paper out yesterday that made some fascinating observations about education, immigration, and human capital. With the totally hip title, The Human Capital Model of Selection and the Economic Outcomes of Immigrants (authors: Picot, Hou and Qiu), it’s a good example both of what Statscan-type analyses do well, and do poorly.
At one level, it’s a very good study. It uses the Longitudinal Administrative Databank (Statscan’s coolest database – it’s a longitudinal 20% sample of all of the country’s taxfilers) to follow the fates of newcomers to Canada in terms of earnings. What they find is that in the first few years after entry, the very large wage premiums that “economic class” immigrants (as opposed to “family class”) with degrees used to have over immigrants without degrees has shrunk substantially. However, over the longer term, the study also finds that educated immigrants have a much steeper earnings slope than those with less education – which is to say that if you shift the lens from “what are immigrants’ labour market experiences in their first three years in Canada”, to “what are immigrants’ labour market experiences in the first ten-to-fifteen years in Canada”, you get a much different, and more positive story.
Now, a lot of people want to know why immigrants with degrees aren’t doing as well in the short term, even if the decline in long-term fortunes isn’t as severe as first thought. The authors don’t answer this question, but many others have come up with hypotheses. When you hear stories about immigrants doing worse than they used to in the labour market, even holding education constant, it’s easy to jump to conclusions. Canadian immigration since the 1980s has increasingly been from Asian countries, so it’s easy enough to conjure up some racism-related theories about the decline. But I want to point something else out. Below I reproduce a table from a this recent UNESCO report on higher education systems in Asia. It shows the distribution of university professors by various levels of qualifications.
Table 1: Highest Level of Higher Education Instructors’ Academic Attainment, Selected Asian Countries
Here’s the problem: Should we really assume that a Bachelor’s degree from Indonesia confers the same skills that one from the US or Europe does? Probably not. And yet every single Statscan study that looks at education, immigration, and earnings assumes that a degree is a degree, no matter where it’s earned. I understand why they would do that; how else would one judge equivalencies? And yet choosing to ignore it doesn’t help either. The reason today’s university-educated immigrants are doing worse than the ones of 30 years ago may simply be that they have lower average levels of skills because of where they went to school.
None of this is to suggest racism isn’t a factor in deteriorating incomes for new immigrants, or that Canadian employers aren’t ridiculous and discriminatory in their demands that new hires have “Canadian experience”. It’s simply to say that degrees aren’t all made the same, and it would be nice if some of our research on the subject acknowledged this.