Persistent Low-Income Among Recent Immigrants

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 • Employment earnings most studied area of immigrant economic assimilation • 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) • Numerous explanations explored (Picot and Sweetman, 2005 for summary) • Earnings studies exclude effects of changing employment/unemployment levels, social transfer use, discouraged worker effects, other family earners • Low-income measures a simple and comprehensive means of focussing on changes in “family welfare” • 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? • 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 50-54 • 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 2003. But increase observed in other occupations • Occupational results reflected in education. Most rapid increase among university educated; 20% increase 01 03 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 • Earlier results cross-section; no information re: persistence of low-income – important • How transient/persistent is the low-income experienced? • 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*

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 • 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 • The recent deterioration is concentrated among very recent immigrants (in Canada 1 or 2 years) • Although deterioration was widespread, it was most noticeable among the skilled class, in information technology occupations, and those with degrees • Deterioration occurred in spite of entering immigrants having more labour market friendly assets: education and skilled class • Deterioration since 2000 not likely just related to high-technology bust…. seen in other occupations, education levels, but this likely played a role

17. Chronic low-income about 2.5 times higher among entering immigrants than “comparison” group • Chronic low-income is very persistent: 10 years chronic low-income rate only marginally lower than 5 years rate • 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. Very different trends in chronic low-income among cities partially related to economic trends, changing immigrant demographics, but puzzle remains (Montreal) • 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 • Due mainly to rising shares, the face of those in chronic low-income changes significantly over 90s: ½ in skilled class (up from 16%), ⅓ have degrees (up from 12%) • Need to better capture economic conditions in models • Why the improvement in Montreal?