Chronic low income and low-income dynamics among recent immigrants / by Garnett Picot, Feng Hou and Simon Coulombe Picot, Garnett

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Picot, Garnett
Immigrants - Canada - Economic conditions - Statistics.; Labor supply - Effect of education on - Canada - Statistics.; Immigrants - Employment - Canada - Statistics.
The deteriorating economic outcomes among immigrants entering during the 1980s and 1990s have prompted much public concern and policy debate. In 1993, immigrant selection procedures were further modified to increase immigrants' educational attainment and the share of immigrants in the "skilled" economic class. By 2000, dramatic increases in the educational attainment of entering immigrants and the share in the skilled class were observed. In the face of these and other changes, this research focuses on three issues: (1) whether entering immigrants economic outcomes improved after 2000 (the last date for which we have such information from the census), (2) low-income dynamics among successive cohorts of entering immigrants, including changes in the entry and exit probabilities, and the extent of "chronic" low income among successive cohorts, and, (3) whether rising educational attainment and increasing share in the "skilled" class resulted in improvements in economic outcomes as measured by poverty entry, exit and chronic low income. Based on the Longitudinal Administrative Database (LAD) and the Longitudinal Immigration Database (IMDB) data, we find that low-income rates among recent immigrants deteriorated after 2000. Low-income rates of immigrants during their first full year in Canada reached 3.5 times that of the Canadian born in 2002 and fell to 3.2 times in 2004. These rates were higher than at any time during the 1990s (at around 3.0). However, this rise in low income was concentrated among immigrants who had entered very recently (in Canada one or two years), suggesting an increase in the short-term adjustment problem in the 2000s as compared to the 1990s. The downturn in the technology sector after 2000 might be a partial explanation, as the share of entering immigrants in information technology (IT) and engineering occupations rose dramatically over the 1990s. Among immigrants entering Canada during the 1990s, most experienced low income at some time during their first decade in Canada (about 65%). Most of those entering low income did so in the first year in Canada, when the likelihood of entry was in the 34% to 46% range, depending upon the entering cohort. If immigrants escaped low income in their first year, the likelihood of entry in subsequent years fell dramatically to below 10%. However, as with the Canadian born, many spells of low income are short lived. From 35% to 40% exited low income after one year. In both the raw data and after conditioning on the characteristics of immigrants, poverty dynamics outcomes deteriorated for immigrants entering Canada after 2000 -- the probability of entry rose, and of exit fell. In order to capture entry, exit and re-entry patterns in a single measure, a "chronic" low-income measure (in low income four of the first five years in Canada) was produced. About one-fifth of immigrants entering Canada during the 1990s found themselves in chronic low income, a rate about 2.5 times higher than among the Canadian born. The chronic low-income rate fell somewhat between the 1993 and 1999 entering cohorts. There were two possible reasons for the decline: the more favorable labour market-related characteristics of immigrants entering in the late 1990s, and improving economic conditions (business cycle). The former accounted for virtually none of the improvement, the latter for the majority. Overall, the dramatic rise in educational attainment of entering immigrants and the shift to the skilled class immigrant had only a very small effect on poverty outcomes as measured by the probability of entry, exit and chronic rates. This is because by the early 2000s, skilled class entering immigrants were actually more likely to enter low income and be in chronic low income than their family class counterparts, and the small advantage that the university educated entering immigrants had over, say, the high school educated in the early 1990s had largely disappeared by 2000, as the number of highly educated rose. What did change, was the face of the chronically poor immigrant; by the late 1990s, one-half were in the skilled economic class, and 41% had degrees (up from 13% in the early 1990s).
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