No economic improvement among new immigrants in Canada

No economic improvement among new immigrants in Canada

The economic situation of new immigrants to Canada showed no improvement after the turn of the millennium — despite the fact that they had much higher levels of education and many more were in the skilled immigrant class than a decade earlier, according to a new report.

The report examines the economic welfare of immigrant families, not just individuals. It assesses their economic situation since 2000, and the extent of “chronic” low income, and the impact of changes in education and skill classes on their economic well-being since 1993.

In 2002, low-income rates among immigrants during their first full year in Canada were 3.5 times higher than those of Canadian-born people. By 2004, they had edged down to 3.2 times higher.
These rates were higher than at any time during the 1990s, when they were around three times higher than rates for Canadian-born people.

The increase in low income was concentrated among immigrants who had just recently entered the country, that is, they had been here only one or two years. This suggests they had more problems adjusting over the short-term during the years since 2000.

One possible explanation may have been the downturn in the technology sector after 2000. The proportion of recent immigrants who were in occupations in information technology and engineering rose dramatically over the 1990s.

The report found that overall, the large increase in educational attainment of new immigrants, and the shift to the skilled class immigrant, had only a small impact on their likelihood of being in low income.
In 1993, the selection system for immigrants was modified to attract more highly educated immigrants, as well as more in economic “skilled” classes.

As a result, among new immigrants aged 15 and older, the proportion with university degrees rose from 17% in 1992 to 45% in 2004. And the share in the economic skilled immigrant class increased from 29% to 51%.

Probability of entering and leaving a period of low income

The probability of entering a period of low income was very high for immigrants during their first year in Canada. It ranged from 34% to 46% depending upon their year of arrival.

However, if immigrants did not enter a period of low income during their first year, the likelihood of that happening fell substantially to 10% or less for subsequent years in Canada.

The result was that for immigrants who arrived during the early 1990s, about 65% entered low income at some time during their first 10 years in Canada. Of these, two-thirds did so during their first year.

If arriving immigrants escaped low income in their first full year, their chances of remaining out of low income were quite high.

For many, the first low-income spell was quite short. Between 34% and 41% exited after one year, depending on arrival cohorts. About one-third remained in their first period of low income after three years. However, even if they left a period of low income, it was possible they could re-enter at some later point.

The rapid increase throughout the 1990s in the share of arriving immigrants who were highly-educated and in the skilled economic class might have been expected to lower the chance of entering low-income, and increase the likelihood of leaving. This is because the more highly educated and “economic class” immigrants traditionally did better in the labour market.

However, the report shows that these changes had relatively little impact on entry and exit rates throughout the 1990s.

This was partly because there was only a small difference in low-income entry and exit patterns between immigrants who were more educated, and those with less education. Furthermore, by the early 2000s, immigrants in the skilled economic class were more likely to enter low income than their family-class counterparts.

For example, for the group that arrived in 2003, the probability of entering low income during the first year in Canada was about 2.3 percentage points lower than it would have been had the educational and class characteristics of the arriving immigrants not changed.

In contrast, the business cycle had a much bigger impact. The entry rate into low income fell by about 11.5 percentage points between the peak and the trough of the cycle.

Nearly a fifth of recent immigrants were in chronic low income

For the purposes of this report, “chronic” low income was defined as being in low income at least four of the first five years in Canada.

The report found that nearly one in five (18.5%) of recent immigrants who arrived between 1992 and 2000 were in low income at least four years during their first five years in Canada. This was more than twice the corresponding rate of around 8% among Canadian-born people.

SOURCE: STATISTICS CANADA