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Foreign human capital and the earnings gap between immigrants and Canadian-born workers

Nicole Fortin, Thomas Lemieux () and Javier Torres Gomez ()

Labour Economics, 2016, vol. 41, issue C, 104-119

Abstract: We use new information on the location of study of immigrants available in the 2006 Canadian Census to estimate returns to Canadian and foreign human capital. We find that controlling for the source of human capital (Canadian versus foreign) helps account for a large share of the immigrant/native-born wage gap. We show that commonly-used imputation procedures (e.g. Friedberg, 2000) that assign domestic and foreign education based on age at arrival tend to overestimate the returns to foreign education and underestimate the returns to foreign work experience. We also find that the immigrant/native-born wage gap is highly heterogeneous across places of birth even after including location of study fixed effects, although this inclusion markedly reduces the negative country of origin effects for countries like China, Pakistan, and India. Finally, we note substantial heterogeneity in the portability of human capital across fields of study.

Keywords: Immigrant assimilation; Human capital; Wage gap (search for similar items in EconPapers)
JEL-codes: J15 J24 J31 J70 (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1016/j.labeco.2016.05.021

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