Immigrant Earnings Growth: Selection Bias or Real Progress?

Statistics Canada Analytical Studies Branch Research Paper Series No. 340

30 Pages Posted: 29 Feb 2012

See all articles by Garnett Picot

Garnett Picot

Statistics Canada

Patrizio Piraino

University of Cape Town - Faculty of Commerce - School of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: February 28, 2012

Abstract

This paper studies the effect of selective attrition on estimates of immigrant earnings growth based on repeated cross-sectional data in Canada. Recent evidence from longitudinal data in the United States shows that the earnings gap between immigrants and the U.S.-born closes more slowly over time in the years following landing than previous cross-sectional estimates have suggested. This is because results based on repeated cross-sectional data contained a bias introduced by selective attrition of immigrants. This study uses longitudinal tax data linked to immigrant landing records in order to estimate the change in immigrant earnings and the immigrant-Canadian-born earnings gap. The results are compared with those from repeated cross-sectional data. When one focuses on the earnings growth of immigrants, earnings trajectories based on repeated cross-sections are found to be biased marginally upwards as a result of selective immigrant attrition. However, no evidence is found of a bias in the trajectory of the immigrant-Canadian-born earnings gap on the basis of repeated cross-sectional data in Canada. While low-earning immigrants are more likely than their high-earning counterparts to leave the cross-sectional samples over time, the same is true of the Canadian-born population. Thus, no evidence of a bias is observed when one compares immigrant earnings trajectories with the trajectories of the Canadian-born.

Keywords: immigration, assimilation, longitudinal data, selection bias

JEL Classification: J31, J61

Suggested Citation

Picot, Garnett and Piraino, Patrizio, Immigrant Earnings Growth: Selection Bias or Real Progress? (February 28, 2012). Statistics Canada Analytical Studies Branch Research Paper Series No. 340, Available at SSRN: https://ssrn.com/abstract=2012468 or http://dx.doi.org/10.2139/ssrn.2012468

Garnett Picot (Contact Author)

Statistics Canada ( email )

Ottawa, Ontario
Canada
613-951-8214 (Phone)
613-951-5403 (Fax)

Patrizio Piraino

University of Cape Town - Faculty of Commerce - School of Economics ( email )

South Africa

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