Comparing Outcomes: The Relative Job-Market Performance of Former International Students.

Author:Skuterud, Mikal


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Canada is increasingly looking to international students as a source of post-secondary tuition revenues and new immigrants. We compare the labour-market performance of former international students (FISs) who studied at Canadian institutions through the first decade of the 2000s to their Canadian born-and-educated (CBE), as well as to their foreign born-and-educated (FBE) counterparts.

We find FISs outperform FBE immigrants by a substantial margin, but under-perform CBE graduates from similar post-secondary programs. We also find evidence of a deterioration in FIS outcomes relative to both comparison groups.

The contribution of our analysis is threefold. First, in comparing FIS and FBE immigrants, we obtain evidence that giving preference to Canadian-educated applicants in the Express Entry immigration system is optimal.

Second, in comparing FISs with CBE individuals graduating from similar academic programs, the results are consistent with FISs experiencing job search frictions, discrimination, and language difficulties, thereby requiring better immigrant settlement policies.

Finally, with three cohorts of FISs spanning the first decade of the 2000s, we find that there has been a deterioration in the labour-market performance of FISs as post-secondary institutions and governments have reached deeper into foreign student pools to meet their student and immigration demands. We argue that this deterioration is most consistent with a trade-off that has occurred, as the quality and supply of international students has not kept pace with the growth in demand. As Canada moves to increase its reliance on international students, monitoring the relative labour-market performance of FISs is critical.

Following significant provincial funding cuts to universities and colleges throughout the 1990s, these institutions in all provinces were forced to increase their reliance on tuition revenues (Martin 2009)

This provided a solution while enrolments were increasing, but recent domestic demographic shifts have resulted in a decline in the typical postsecondary entry-aged population (18-20 years old).

As a result, institutions are increasingly looking to the tuition fees of foreign students to balance their budgets, which unlike domestic fees, are not capped by provincial governments. (1) As Canada competes against other jurisdictions to attract international talent, immigration policies can help boost student enrolment. Mechanisms such as a pathway to Canadian permanent residency or policy changes that give preference to professional candidates with Canadian educational credentials are highly complementary to post-secondary institutions' recruitment efforts.

In theory, the federal government's preference for international students is well justified. Canadian-educated immigrants are less likely to experience credential recognition issues. The skills they have acquired are more likely to be relevant to the Canadian workplace. Their time spent studying in Canada should help them to acculturate more easily to Canadian society. This includes acquiring superior English and French skills, as well as social networks that can help in job searches following graduation. Canadian education may also provide opportunities to gain Canadian work experience through work-integrated learning programs such as co-ops.

But, overall, the evidence is mixed on how former international students (FISs) perform in the labour market. Studies have consistently found little to no evidence that immigrants' foreign credentials are discounted relative to their Canadian credentials (Ferrer and Riddell 2008; Skuterud and Su 2012; Bonikowska, Hou and Picot 2015). (2) Sweetman and Warman (2014) find some evidence of higher earnings among FISs, who immigrated to Canada as principal applicants under the federal government's Skilled Worker Program (FSWP), when compared to principal applicants under the FSWP who only had foreign education, four years after landing, using weekly and hourly earnings. Finally, Hou and Lu (2017) link administrative immigration and tax data to show significantly higher average earnings among FISs than among foreign born-and-educated (FBE) immigrants, both in the short run and 10 years after arrival. However, this earnings advantage is small in comparison to the gap relative to the Canadian born-and-educated (CBE) comparison group.

In this Commentary, we exploit data from the Canadian National Graduates Survey (NGS), a nationally representative survey of post-secondary graduates from a Canadian public institution, to compare the labour-market performance of three graduating cohorts (2000,2005 and 2009/2010) of FISs who have transitioned to permanent residency with their CBE counterparts graduating at the same time with similar credentials in similar fields of study. In addition, using data from the Labour Force Survey (LFS), we extract a sample of FBE immigrants with a post-secondary education whose landing years in Canada correspond to the graduating years of the FIS in our NGS sample. We then compare labour-market outcomes among similarly educated FIS and FBE immigrants from comparable regions.

Consistent with the findings of Hou and Lu (2017), we find that FISs outperform FBE immigrants by a substantial margin, but lag behind their CBE counterparts. However, the FIS gaps we identify relative to the CBE comparison group are modest. In fact, we find essentially no shortfall in the average earnings of male FISs and CBE post-secondary graduates and only small gaps for women when we exclude education level and field of study. However, when we compare FIS and CBE graduates from similar academic programs, the gaps become larger and tend to be largest for women with college diplomas in fields outside of math and computer science and for Chinese men and South-Asian women. The gaps between FIS and CBE graduates are also higher at the bottom end of the earnings distribution. Moreover, we find some evidence, particularly among women, that the relative performance of FIS has tended to deteriorate over a decade relative to both FBE and CBE comparison groups.

The contribution of our analysis is threefold. First, in comparing FISs and FBE immigrants, we obtain evidence that giving preference to Canadian-educated applicants in the Express Entry immigration system is optimal. (3)

Second, in comparing FISs with CBE individuals graduating from similar academic programs, we obtain evidence on...

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