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August 26, 2015STUDY: WHICH HUMAN CAPITAL CHARACTERISTICS BEST PREDICT THE EARNINGS OF ECONOMIC IMMIGRANTS Today, Statistics Canada released a study on Human Capital Characteristics and Immigrant Earnings looking at the relative importance of human capital factors at time of landing on the earnings of economic immigrants in the short (first 2 full years in Canada), intermediate (5-6 years after landing) and long-term (10-11 years after landing). Using the Longitudinal Immigration Database (IMDB) immigrants from the Economic class (federal skilled workers and provincial nominee programs) between age 20 and 54 are included in the study. Human capital factors at the time of landing (age, education, official-language characteristics, Canadian work experience, years of study in Canada, spouse's characteristics) are examined to address two questions: which observable human capital factors have the greatest predictive power of earnings and does the relative importance of these factors vary depending on the time since landing.
The study finds that the relative predictive power of the factors do change between the short, intermediate, and long-term. Language at landing is one of most important variables in the short-term but becomes less important as the differences in immigrant's language characteristics likely converge over time. Canadian work experience prior to landing is a strong predictor of earnings in the short-term but less so in the long-term. Education and age show the opposite pattern, being relatively weak predictors in the short run but increase in predictive power when more years since landing have passed with more educated and younger immigrants having higher earnings. Spousal characteristics were found to have little predictive power on earnings in either the short or long-term. Certain variables had increased predictive power when they were interacted with another characteristic to measure their joint impact. For instance, the earnings for a bachelor's degree holders was 28 to 55% more than for those with 10 to 12 years of schooling when they had prior Canadian work experience at landing, but only 0 to 9% when they did not. Language also showed some important interaction effects with age and education with the earning advantage from having a higher education being greater for immigrants with strong language skills at entry.