1

Persistent Low-Income Among Recent Immigrants

By

G. PicotF. Hou

R. FinnieS. 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

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» 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)

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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

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Low-Income Trends

* Includes Canadian-born plus immigrants in Canada more than 10 years

Low-income rates, 1992-2003: Recent immigrants and the comparison group aged

20+

0,0

10,0

20,0

30,0

40,0

50,0

60,0

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Immigrants in Canada one full year

Immigrants in Canada 10 years or less

"Comparison" group*

Low

-inco

me rate

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Low-Income Rates Relative to the Canadian-Born

Relative low-income rate: Immigrants to the comparison group 20+, 1992-2003

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Immigrants 1 year relative to comparison group

Immigrants <10 yrs relative to comparison group

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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

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Low-Income Rates Decline with Years in Canada, but Remain well above

those of “Comparison” Group

* Ratio of low-income rate of immigrants to that of the "comparison" group.

Relative* low-income rate for entering Immigrant cohorts from 1992 to 2003, by

years in Canada

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

1 2 3 4 5 6 7 8 9 10

1992

1995

1997

2000

2001

2002

2003

Years in Canada

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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?

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The Rate of Chronic Low-Income

Chronic low-income rates - In low-income at least 4 of 5 years following entry

to Canada -

0

5

10

15

20

25

Average 1992-1999 cohorts

"Comparison"group 25-54

Comparison group25-29

"10 years" chronicL.I. rate among

1992-1994cohorts

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Variation in Chronic Rates across Cohorts

* City-specific rates for immigrants in Toronto, Montreal, Vancouver, provincial rates elsewhere

Chronic low-income rate

0

3

6

9

12

15

18

21

24

199

2

199

3

199

4

199

5

199

6

199

7

199

8

199

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Raw data

Controlling for demographics

Average 5 years unemployment rate*

Entering cohorts

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Chronic Low-Income Rate by City*

Vancouver

0,0

5,0

10,0

15,0

20,0

25,0

30,0

1992 1993 1994 1995 1996 1997 1998 1999

Controlling for demographics

Chronic low-income rate**

5 yr unemployment rate

Toronto

0,0

5,0

10,0

15,0

20,0

25,0

30,0

1992 1993 1994 1995 1996 1997 1998 1999

Chronic low-income rate**

Controlling for demographics

5 yr unemployment rate

Montreal

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

1992 1993 1994 1995 1996 1997 1998 1999

Chronic low-income rate**

Controlling for demographics

5 yr unemployment rate

* Using city-specific low-income cutoffs

** Unemployment rate over 5 years following cohort entering of males 25-54

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1993 cohort

1999 cohort

1993 cohort

1999 cohort

1993 cohort

1999 cohort

Class Skilled 16,9 17,2 21,9 53,1 16,3 49,9 Family 18,8 14,7 35,2 28,4 32,6 24,8 Refugees 31,6 26,1 16,3 13,8 25,0 22,1

Education ≤ High school 22,6 19,6 48,3 28,6 57,9 36,1 Some post-seconary 19,6 16,9 33,5 28,7 29,8 27,7 Degree 16,5 15,8 18,2 42,6 12,3 36,3

Source region East Asia (India, Pakistan) 13,2 21,4 16,4 27,5 Africa 8,0 8,4 12,3 11,6 South Asia (China, etc.) 17,5 16,2 16,2 19,9 Sub-total 38,7 46,0 44,9 59,0 Caribbean 15,1 5,7 16,4 4,9 Eastern Europe 13,0 17,4 8,1 11,0 Rest of Europe 7,4 5,8 3,3 2,3 North America 2,0 1,5 0,7 0,610,0

11,3

% distribution of entering

immigrants

% distribution of those in chronic

low-income

Predicted chronic low-income rate - Controlling for

demographic differences -

16,2

23,629,1

10,0

18,8

The Characteristics of Immigrants in Chronic Low-Income

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Entry into First Low-Income Spell

Predicted survival rates* - proportion remaining out of low-income, by number of years in Canada

0,00

0,10

0,20

0,30

0,40

0,50

0,60

0,70

1 2 3 4 5 6 7 8 9 10 11 12

1992

1995

1997

2000

2002

2003

Years in Canada

* Controlling for differences among cohorts in demographic characteristics

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Exit from First Low-Income Spell

3 years 5 years 10 years1992 37.9% 36.5% 26.1% 13.5%1995 37.3% 35.8% 24.2%1997 40.3% 33.2% 24.3%2000 37.8% 38.3%2001 34.4% 41.2%2002 33.5%

* Controlling for differences in demographic characteristics among groups

Proportion remaining in 1st low-income spell after:

Predicted proportion exiting first low-income spell,by number of years in low-income

Proportion exiting after

1 yearBy

cohort*

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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

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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)

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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?