Foreign Qualification Recognition: An economic perspective Arthur Sweetman Department of Economics

Selected Regulated Professions in Health Place of birth and location of highest study (%) 2

Part of a broader issue: The portability of human capital Credentials  Not only formal high school/college/university qualifications  Not major source of well known long-term decline in immigrant earnings  Recognition is a “two way street” Need bridging programs and the like to complement pre- migration in many cases But, hard to “fill gaps” 3

Not all internationally training suits Canadian requirements Next slide:  Licensure examination pass rates for first time test takers (%) 4

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General labour market experience Reflects value of occupational/industrial/firm human capital  FOR THE CANADIAN BORN At least as important as credentials for earnings  FOR IMMIGRANTS Essentially zero or even negative economic rate of return to pre-migration experience  “Flip side” is penalty to increasing age-at-immigration Very large return to Canadian experience But, esp. important for skilled trades and other employment where “uncertified” on-the- job learning is prominent 6

Language skills Probably the most important predictor(s) of labour market success  Together with age-at-immigration, where less experience is better Not easily developed without formal education/training  In general, literacy increases with schooling, but not with general labour market experience or age In fact, literacy appears to decline with increasing years since graduation 7

Focusing on Regulated Professions In medicine, in non-systematic survey, Sharieff and Zakus (2006) observe that language testing is more of a hurdle than medical licensing/entry exams 8

Interactions of Skills Substantial evidence that we cannot view credentials in isolation from other skills Especially, language skills mediate the economic value of education Not new, but worth reiterating 9

Ferrer, Green and Riddell (2006) English/French literacy among immigrants is lower than that among the Canadian born  Both receive the same rate of return to literacy  Further, “the standard result that immigrants’ return to a university education acquired before migration is lower than native-born returns to a host country-acquired university education is eliminated once we control for literacy.” (p. 408)  Gap in literacy explains about 2/3 of immigrant earnings disadvantage among university educated Less important for those with less than university  Literacy has no impact of return to experience 10

Goldmann, Sweetman and Warman (2011) Effectively no return to pre-migration education (in medium term) without either  English/French language skills OR  Pre- and post-migration occupational match If have both then added benefit (interaction effect) Earnings and the rate of return to education are increasing with improved language skills 11

Those who successfully match pre- and post- migration occupations obtain a large earnings boost  About the same for regulated and non-regulated occupations in (% terms) However, even with a job match, there is no economic return to pre-migration labour market experience without language skills  Return to experience small even with language Looking at those successfully employed in regulated/licensed occupations  Very similar patterns overall 12

Points and labour market outcomes Traditional points system is a “threshold” model, whereas proposed models are closer to “competitive” one Outcomes improve across the entire points spectrum 13

Points, annual earnings and employment 14 Sweetman and Warman, 2013

What does all of this tell us? From an economic perspective, the new selection models appear to be well suited to prompting labour market outcomes at entry, and, much more importantly, in the medium and longer terms  Although some questions about value of pre- migration experience, only a short duration is required and criteria has functions in addition to serving as measure of human capital A lot of this is concerns qualification recognition in the broadest sense 15

Any Downside? Maybe The easier the system is for employers, the higher the likelihood of new immigrants being substitutes for, rather than compliments to, the existing workforce  Most affected are those most like the new arrivals – typically recent arrivals Hence, the LMO becomes an increasingly important tool in preventing adverse events in the selection process 16

Overall Credential recognition appears to be being facilitated, and favourable labour market outcomes supported But, careful (and public/transparent) monitoring is required  Not only for outcomes of new immigrants, but impacts on others in society (although this last is hard and methodologically controversial) 17