Migration, and skills disparitiesacross the Canadian provinces

By Serge Coulombe

& Jean-François Tremblay

Department of Economics

University of Ottawa

We are grateful to Ivelina DeLeva and Betty You for research assistance and to the HRDC-IC-SSHRC Skills Research Initiative for financing.

Motivations of the study

• Human capital (H) one of the key determinants of living standards across developed countries

• H (output) is “produced” by a combination of factors or inputs such as (years of schooling, quality of education, experience and pertinence of experience).

• In standard approaches (labour economics, development accounting) H is measured by an input most specifically schooling, S

• We provide output measures of the aggregate human capital intensity of Canada and the ten provinces from skill data (IALLS 2003)

Skills matter

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Figure 12: Skill and income disparities

slope ols 2.20p-value .017R-squared .48

Inco

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Skill disparities

Note: Figure taken from Coulombe and Tremblay (2006). Skills of non-migrants and personal income minus transfers to individuals; 10 provinces, 2003. Logarithm deviations from the cross-sectional sample mean

Motivations of the study

• Does-it matters to use an input or and output measure?• Answer: YES when comes the time to measure the

contribution of international immigration (II) to the human capital intensity

• Why? International immigrants have more years of schooling but substantially less skills (Skill-schooling gap) than the Canadian-born population

• Does-it matter a lot? YES, From a schooling measure, II contribute to slightly decrease human capital disparities across provinces, from a skill measure, the effect of II is to decrease regional disparities by 45%

Data

• Construction of aggregate data base from raw data of 2003 Canadian sample of International Adult Literacy and Skills Survey (IALSS)

• IALSS designed to capture skill differences across countries and across subgroups of the population with different cultural backgrounds.

• IALSS is a stratified multi-stage sample, population 16 years and over, we use a sample of 20 019 respondants, from the ten provinces, 16 559 Canadian-born, and 3460 foreign-born

• Average data from four literacy domains: prose, document, numeracy, and problem solving

Two Contributions of the paper

1- The effect of migration flows (interprovincial and international) on Canadian provincial disparity

International migration decreases provincial disparities (human capital) whereas inteprovincial migration increases them. The first effect dominates the second. Simple accounting approach, the second effect dominates with input measure (schooling) for international migration.

Natural extension of the regional convergence research program that goes back to Coulombe and Lee (1995), Coulombe (2000) with the focus on human capital: Coulombe and Tremblay (2001), Coulombe (2003), and Coulombe and Tremblay (2006).

Second: Schooling is a biased indicator of human capital at the cross-country level

This is the natural extension of our recent research program on explaining cross-country differences in living standards with a special emphasis on human capital

Borjas (1987) (earning is associated with Q (EQ))

Klenow and Rodriguez-Clare (1997) (development accounting, EQ)

Hendricks (2002) (development accounting, EQ)

Manuelli and Seshadri (2005) (development accounting, theory of EQ)

Sweetman (2004) (Canadian immigrant and quality of education, Skill with Q)

Ferrer, A., D. A. Green, and W. C. Riddell (2004) (micro skills of international migrants)

Coulombe, Tremblay and Marchand (2004) (growth regression, Schooling versus skill)

Coulombe and Tremblay (2006) (Canadian province versus CTM 2004)

I- International migration and the skill-schooling gap

H=F(S, Q, …)

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6 8 10 12 14 16 18 20 22

Canadian-bornInternational immigrants

Figure 3: Literacy score and years of formal education - Canada

Note: Computed by the authors from IALSS 2003. Vertical axis: mean literacy score.Horizontal axis: years of formal education

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Residual Actual Fitted

Figure 4. The skill-schooling curve of Canadian-born population

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Mean years of formal education

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China 4.11 Sri Lanka 5.03 Sub-Saharan English 5.92EI Salvador 4.93 Taiwan 3.56 Sub-Saharan French 1.09France 2.09 UK 1.08 South-East Asia 3.36USSR 5.69 US 0.65 South-East Asia-Dev 0.64Vietnam 3.75 Romania 2.42 Jordan, Turkey, Syria 3.95Guyana 3.78 Algeria and 4.11 South Africa -0.16Germany 2.45 Tunisia South Korea 5.48HK 2.82 Austria and -0.79 Morocco 5.10India 5.26 Switzerland Argentina, Brazil, Uruguay 1.50Iran 3.01 Bangladesh 5.03 Bolivia, Chile, Peru 6.12Italy 1.73 Belgium and 0.75 ParaguayJamaica 4.96 Luxemburg Other South America 5.26Lebanon 4.06 Egypt 4.58 Other Caribbean 5.10Mexico 3.94 Greece 5.72 Netherlands 0.04Haiti 5.65 Portugal 1.80 Other Oceania 4.35Pakistan 6.18 Ireland 2.38 North Europe 2.60Philippines 4.27 Israel 3.11 East Europe 3.65Poland 5.65 Japan 3.66 Trinidad and Tobago 3.46

List of the Skill-Schooling GAP of the Origin Countries (Taken from Yan Hou 2008)

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Figure 18: The skill-schooling gap and per capita income per origin country, 26 countries

slope ols = -0.11 (p-value .00)constant = 4.17 (p-value .00)R-squared .41

Note: See note to Table 1 for data definition and sources. The reported coefficient for the slope parameter is in US thousand dollars.

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Figure 10. The skill-schooling gap of international immigrants,10 provinces and Canada

BC AB SK MB ON QC NB NS PE* NF

Canadian mean

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BC AB MB ON QC NB NS CA

Figure 11: The skill-schooling gap of international immigrants with English or French as first language, 7 provinces and Canada

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total foreign-bornforeign-born with language skillsforeign-born, some schooling in Canadaforeign-born, all schooling outside Canadasecond generation, 1 parent foreign-bornsecond generation, 2 parents foreign-born

Figure 19: The skill-schooling gap of international immigrants and second generationCanada - various sub-groups

Note: Computed by the authors from IALSS 2003.

II- Migration and provincial disparity

• Skill intensity of foreign-born population varies widely across provinces

Tends to reduce provincial disparities

• Typical interprovincial migrant has a skill level higher than the non-migrant

Skill redistribution process from the poorer to the richer Canadian provinces

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Figure 9. Literacy mean overall score for international immigrants, per province

BC AB SK MB ON QC NB NS PE* NF

Note: Computed by the authors from IALSS 2003.

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Figure 13: Net contribution of international migration on the mean skill level per province

BC AB SK MB ON QC NBNS PE* NF

TotalCanada

Note: Computed by the authors from IALSS 2003 - Differences between the mean skill levels of the total and the Canadian-born populations.

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Figure 14: Net contribution of interprovincial migration on the mean skill level per province

ABBC

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ONQC NB

NS PENF

Note: Computed by the authors from IALSS 2003 using gross migration data displayed in Appendix.

Net effect of both channels on provincial disparity

• A - The dispersion (SD) of skill intensity across Canadian provinces is reduced by 45 percent when international immigration is accounted for. (By comparison, international immigration reduces the

dispersion in years of schooling by only 9 percent ) • B - Interprovincial migration accounts for an

increase of 21 percent of the dispersion of the skill intensity across the Canadian provinces.

• Effect A dominates B, result from the skill (instead of schooling) approach

Main findings

• Schooling is a biased indicator of human capital (skills) at the cross-country level

Potential implications for the immigration selection process and for Foreign Credential Recognition (FCR) program: recognize and select from skills

• International immigration and interprovincial migration have opposite effects on provincial disparities

Net effect is to decrease disparities