Economics at your fingertips  

The Impact of Imperfect Information on the Wages of Native-Born and Immigrant Workers: Evidence from the 2006 Canadian Census

Atul Dar ()
Additional contact information
Atul Dar: Saint Mary's University

No 401532, Proceedings of Economics and Finance Conferences from International Institute of Social and Economic Sciences

Abstract: This paper empirically examines how imperfect information about wage offers and reservation wages among employees and employers respectively impacts on the wages of Canadian born and immigrant workers. We estimate these effects from 2006 census data using a two-tier stochastic wage frontier. Our main contributions are: first, the use 2006 census data allows us to examine how the international transferability of immigrant human capital (or the lack of it) impacts on worker and employer information - this could not be done with earlier censuses, but is a critical factor that separates the labour market experience of immigrants (especially newcomers) from that of native-born Canadians; second, we adopt a more general approach to information gaps by re-parameterizing the frontier model to incorporate the impact of individual differences on labour market information; and third, we allow worker and employer information gaps to vary due to industry fixed effects. Our findings show that Canadian-born and immigrants with similar characteristics tend to experience quite similar wage gaps in the aggregate. While those gaps show significant variation across some industries for both immigrants and Canadian-born workers, and wage gaps due to worker imperfect information are also similar both groups, wage gaps driven by employer imperfect information are much larger among immigrants. As well, the results show that the variability in the amount of information that workers and employers possess is clearly more substantial among immigrants, thereby pointing to greater uncertainty about their wage outcomes. Our analysis of immigrants shows that while the effects of acquiring their degree prior to migration increases the size of wage gaps due to employer and worker imperfect information, these impacts are relatively modest when compared to those arising from a lack of language skills.

Keywords: imperfect information; two-tier wage frontier; wage gaps; Canadian-born and immigrant workers; 2006 census (search for similar items in EconPapers)
JEL-codes: J01 J24 J30 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2014-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 286-303

Downloads: (external link) ... id=4&iid=12&rid=1532 First version, 2014

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this paper

More papers in Proceedings of Economics and Finance Conferences from International Institute of Social and Economic Sciences
Bibliographic data for series maintained by Klara Cermakova ().

Page updated 2023-06-06
Handle: RePEc:sek:iefpro:0401532