Earning Gaps for Chinese Immigrants in Canada and the United States
| Author | Sharon M. Lee,Zheng Wu,Adam Carmichael,Feng Hou,Barry Edmonston |
| Date | 01 April 2018 |
| DOI | http://doi.org/10.1111/imig.12363 |
| Published date | 01 April 2018 |
Earning Gaps for Chinese Immigrants in
Canada and the United States
Zheng Wu*, Sharon M. Lee*, Feng Hou**, Barry Edmonston* and Adam Carmichael*
ABSTRACT
This study compares the US and Canada on the gap in earnings between Chinese immigrants
and native-born whites. Canada and the US are arguably more alike than most possible coun-
try pairings, yet they differ in significant ways in their approaches to immigration and integra-
tion. The primary difference between Canada and the US regarding immigration policy is that
Canada selects a larger proportion of economic immigrants –that is, those admitted based on
their ability to contribute to the economy –than the US’s focus on family reunification. Cana-
dian immigration and multicultural integration policy does not appear to improve Chinese
immigrant earnings in the way that might be predicted from Canada’s skilled-based immigrant
selection policy and welcoming social context. In spite of a more laissez-faire approach to
immigrant integration and a less skill-selective immigration policy, we show that Chinese
immigrants are earning relatively more in the US than in Canada.
INTRODUCTION
Canada and the US are arguably more alike than most possible country pairings, yet they differ in
significant ways in their approaches to immigration policy. This makes the two ripe for compara-
tive analysis that seeks to determine if country differences regarding immigration policy affect out-
comes for immigrants. The purpose of this study is to determine in which country Chinese
immigrants are doing better economically (based on earnings) and to propose some possible rea-
sons for the differences in outcomes between Canada and the US.
This study is significant because the earnings gap difference between the two countries informs
us about the effectiveness of various immigration and integration policies by using earnings parity
as a proxy for successful integration into Canadian and American society. Multiculturalist scholars
tout the more interventionist and pluralist Canadian approach to immigration and integration as
potentially economically beneficial to new immigrants (Ng and Metz, 2015). Bloemraad et al.
(2008) argue that, despite the vast sociological and economic literature on the economic integration
of immigrants, the impact of multicultural policies, as part of the larger institutional environment of
an immigrant receiving country, remains empirically under-examined.
The immigrant earnings literature points to several important variables in the host country’s
immigration and integration policies for immigrant economic performance: the social climate of dis-
crimination, the degree of skills-based targeted immigration criteria, and interventionist integration
policy. The fact that Canada differs from the US along all of these variables makes our case selec-
tion ideal to test the hypothesis that policy differences across countries cause differences in immi-
grant earnings. However, this policy-centric picture is complicated by structural economic factors,
* University of Victoria
** Statistics Canada
doi: 10.1111/imig.12363
©2017 The Authors
International Migration ©2017 IOM
International Migration Vol. 56 (2) 2018
ISS N 00 20- 7985 Published by John Wiley & Sons Ltd.
specifically the overall economic inequality in the host country and labour market flexibility, which
fall outside immigration policy control and may result in more skilled immigrants self-selecting into
one potential host country over another. Our research aims to answer what effect these country dif-
ferences have on the earnings of Chinese immigrants by studying the earnings gap between Chi-
nese immigrants and ‘native-born whites’in Canada and the US using restricted data from the
2011 Canadian National Household Survey (Statistics Canada, 2013) and data from the pooled
2009, 2010, and 2011 American Community Surveys.
CHINA AS SOURCE COUNTRY
For a period in the late-1990s China was the top source country for immigrants in Canada, and in
both Canada and the US, China consistently remains one of the top source countries (Lo and Li,
2012). Limiting our study to Chinese immigrants is necessary in order to get a grasp of the effects
of host country differences rather than effects caused by the source country of the immigrants. Sev-
eral studies show a source country effect on human capital (Bonikowska et al., 2011) and that
selection of a single source country helps to control international differences of immigrants, allow-
ing an examination of the host society itself (Reitz, 1998). Wang and Lo (2005) found that in spite
of significant internal divisions in the category “Chinese”and historical income differences based
on Chinese place of origin, more recent data show that, as a group, Chinese immigrants are begin-
ning to represent a relatively homogeneous economic experience in Canada. The choice of one
source country reduces the complexity of the analysis and allows us to more readily draw conclu-
sions about country differences between Canada and the US.
TWO PEAS IN A POD OR A CONTINENTAL DIVIDE? CANADA AND THE US
Bloemraad (2011) has argued that key institutional differences between Canada and the US in
immigration and integration make the countries ideal candidates for determining if policy differ-
ences result in “consequential differences”for immigrants. Similarly, Reitz (1998) shows that the
institutional climate of immigrant reception varies between Canada and the US across skill selectiv-
ity, labour market earnings disparities, welfare provision, and level of education of the native-born
population. Canada and the US are as close as possible to a natural experiment for testing hypothe-
ses about country-difference effects on immigrant earnings. The primary difference between Canada
and the US regarding immigration policy is that Canada selects a larger proportion of economic
immigrants –that is, those admitted based on their ability to contribute to the economy –than the
US’s focus on family reunification (Lo and Li, 2011). This key difference has often been used as
an explanation for Canada’s immigrant population being more highly educated and more likely to
speak an official language than in the US (Antecol, Cobb-Clark and Trejo, 2003; Lo and Li, 2011).
Immigration policy can indirectly affect immigrant earnings by increasing the overall human capital
of the immigrant population mix (Bauer et al., 2001).
The Canadian emphasis on economic immigration is inextricable from the country’s policy of
multiculturalism, which is another major difference from the US. Since its origin in the Royal
Commission on Bilingualism and Biculturalism, Canadian multiculturalism has been an attempt
to economically and politically integrate various elements of Canadian society while allowing
minority ethnic groups to maintain a sense of group identity (Royal Commission on Bilingualism
and Biculturalism, 1963; MacDonald Commission, 1985). It may be the case, as Reitz (1998)
argues, that the more collectivist and interventionist culture of Canada creates an interactive sys-
tem amongst policy areas affecting immigrants. The interventionist approach to immigrant
Earning Gaps for Chinese Immigrants in Canada and the United States 19
©2017 The Authors. International Migration ©2017 IOM
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