1 Persistent Low-Income Among Recent Immigrants By G. Picot F. Hou R. Finnie S. Coulombe Business and Labour Market Analysis Division Statistics Canada

2 Background l Employment earnings most studied area of immigrant economic assimilation l Deterioration in relative (to Canadian-born) and absolute earnings through 80s and 90s. ( Reitz, 2001; Green and Worswick, 2002; Frenette and Morissette, 2003; Aydemir and Skuterud, 2004; Ferrer and Riddell, 2004 ) l Numerous explanations explored ( Picot and Sweetman, 2005 for summary ) l Earnings studies exclude effects of changing employment/unemployment levels, social transfer use, discouraged worker effects, other family earners l Low-income measures a simple and comprehensive means of focussing on changes in family welfare l Picot and Hou (2003) found »Long-term upward trend in low-income rates among recent immigrants, in spite of rising educational attainment »Rise was wide spread, but particularly evident among Asian and African immigrants »Virtually all of increase in low-income rate in three largest cities concentrated among recent immigrants

3 »But concern often with persistent low-income. Transient low-income less of an issue »The LAD–IMDB created by immigration Canada + income tax data only recently allows such analysis »Work in progress: need to expand modelling to address other issues »Presentation focuses on –Low-income trends among immigrants entering since 2000… improvement? –Levels of chronic low-income among 1990s immigrant cohorts… what are the major predictors? –Low-income dynamics (entry/exit)

4 Data and Methods Data:LAD-IMDB Longitudinal data base, 1992 to 2003 Measuring low-income »Cutoffs: one half median income of all families in Canada (approx. $26,000 for family of four in 2002) »Use adult equivalent adjusted family income after taxes and transfers (disposable income) »Use logistic regression modelling (hazard models) to control for demographic differences among groups, cohorts Control for age, education, gender, immigrant class, intended occupation, family type, self-reported language knowledge, source region »Focus on immigrants aged 20 to 54 at time of entry »Cohort year refers to first full year in Canada (to obtain a full year of income) »Comparison group includes Canadian-born plus immigrants in Canada >10 years

5 Low-Income Trends

6 Low-Income Rates Relative to the Canadian-Born

7 Was the Rise since 2000 Widespread? l Increase in absolute and relative (to comparison group) low-income rates of those in Canada 1 year »Observed among all age groups – but most noticeable for those »Observed in all source regions except North America and Eastern Europe »Largest increase among skilled class, but observed in family/refugees as well »Most rapid increase observed among information technology professionals: rose from average 33.5% in 90s to 47.8% in But increase observed in other occupations »Occupational results reflected in education. Most rapid increase among university educated; 20% increase compared to 7% for H.S. immigrants

8 Low-Income Rates Decline with Years in Canada, but Remain well above those of Comparison Group

9 Chronic Low-Income l Earlier results cross-section; no information re: persistence of low-income – important l How transient/persistent is the low-income experienced? l Variation among groups, across entering cohorts?

10 The Rate of Chronic Low- Income

11 Variation in Chronic Rates across Cohorts

12 Chronic Low-Income Rate by City* * Using city-specific low-income cutoffs ** Unemployment rate over 5 years following cohort entering of males 25-54

13 The Characteristics of Immigrants in Chronic Low-Income

14 Entry into First Low-Income Spell * Controlling for differences among cohorts in demographic characteristics

15 Exit from First Low-Income Spell

16 Summary and Conclusion l Following deterioration among recent immigrants through 80s and 90s (at business cycle peaks), absolute and relative low-income rates continued to rise in 02 and 03 l The recent deterioration is concentrated among very recent immigrants (in Canada 1 or 2 years) l Although deterioration was widespread, it was most noticeable among the skilled class, in information technology occupations, and those with degrees l Deterioration occurred in spite of entering immigrants having more labour market friendly assets: education and skilled class l Deterioration since 2000 not likely just related to high- technology bust…. seen in other occupations, education levels, but this likely played a role

17 l Chronic low-income about 2.5 times higher among entering immigrants than comparison group l Chronic low-income is very persistent: 10 years chronic low-income rate only marginally lower than 5 years rate l Decline in chronic low-income between 93 and 99 cohort likely related to business cycle effects; misleading as an indication of longer term trend, which is almost certainly up (controlling for unemployment rate)

18 l Very different trends in chronic low-income among cities partially related to economic trends, changing immigrant demographics, but puzzle remains (Montreal) l Rate of chronic poverty particularly high among entering immigrants over 50, from East Asia (India, Pakistan), Africa and South Asia (China, Japan), even after controlling for demographic differences l Due mainly to rising shares, the face of those in chronic low-income changes significantly over 90s: ½ in skilled class (up from 16%), have degrees (up from 12%) l Need to better capture economic conditions in models l Why the improvement in Montreal?