Immigrant skill utilization in the Canadian labour market: Implications of human capital research

The quantitative significance of the underutilization of immigrant skills may be assessed, albeit imprecisely, in human-capital earnings analysis. Earnings deficits of immigrants may arise from: (a) lower immigrant skill quality, (b) underutilization of immigrant skills, and (c) pay inequities for immigrants doing the same work as native-born Canadians. Consistent with numerous studies, data from the 1996 census micro-data show that underutilization of immigrant skills is significant, though less so than unequal pay within occupations. In 1996 dollars, the total annual immigrant earnings deficit from all three sources was $15.0 billion, of which $2.4 billion was related to skill underutilization, and $12.6 billion was related to pay inequity. Discussion considers adjustments to these estimates, taking account of difficulties measuring the skill levels of occupations and immigrant skill quality.