Examining the income gap between Canadian-born and immigrant working age adults
University of New Brunswick
This study examines the income gap between immigrants and Canadian-born working-age adults using the 1996, 2006, and 2016 waves of the Canadian Census. Blinder-Oaxaca decomposition methods were used to analyze the explained (differences in observable characteristics) and unexplained (returns to observable characteristics) factors affecting this gap. Results show that immigrants typically earned less than Canadian-born respondents, and the gap grew due to unexplained factors. However, taxes reduced the gap by almost 37% in 2006 and 33% in 2016. Higher levels and returns to education reduced the gap in 1996 and 2006, but in 2016, returns to education contributed to its increase. Furthermore, returns to experience and group-identification increased the unexplained gap, which may be evidence of discriminatory practices. However, firms may also be reducing the valuation of immigrant human capital. Thus, policies to address international accreditation and disparities in global education and employment standards may help reduce the gap.