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“A better system for understanding the relationship between education levels and quality, and how these skills may be transferred, must be reached”

July 20, 2017 – Policymakers must find innovative ways to improve immigrants’ likelihood of finding well-paid employment, states a new report from the C.D. Howe Institute. In “Education Quality and Immigrants’ Success in the Canadian Labour Market,” author Qing Li finds that the earnings of foreign-trained immigrants in Canada are linked not only to the level of their education, but also to its quality.

Li notes that because there is a large gap in wages and employment between immigrants and non-immigrant workers as well as among immigrants from different countries, policymakers could do a better job in selecting or facilitating the arrival of new immigrant workers into the Canadian labour market.

“The differentials in wages between immigrants and Canadian-born workers should reflect differences in human capital and skills,” states the author. “However, education quality could be a key factor in understanding the wage and employment gap, since it could be that skill quality developed through education in other countries cannot be directly transferred to Canada.”

Currently, the federal government uses a points system to select immigrants according to human capital criteria. The system allocates points to individuals based on education, language skills, work experience, age, arranged employment in Canada and adaptability. The current points system treats all education as equal.

The author argues that education level is an imperfect measure for one’s skills, since the quality of education matters.

Li notes that it would be beneficial for Canada to have a system to differentiate between both the level and the quality of education, wherever possible.

The author estimates a rate of return to foreign education as the percentage increase in earnings that accompanies an additional year of school from an immigrant’s home country. The rates of return to education can be quite wide, ranging from as high as 10.1 percent to as low as 1.8 percent.

The author concludes by suggesting that policymakers must find new and innovative ways to ensure a screening process for potential immigrants that is non-discriminatory, and also enables them to find employment at a good wage upon their arrival to Canada.

“A better system for understanding the relationship between education levels and quality, and how these skills may be transferred, must be reached,” says Li. “If this is achieved then immigrants will be better equipped to enter into the Canadian labour market, and have more opportunities to get a job that will better complement their personal skills and education level.”

Click here for the full report.

The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada's most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review.

For more information contact: Qing (Felix) Li, Assistant Professor at the Capital University of Economics and Business in Beijing; Colin Busby, Associate Director of Research at the C.D. Howe Institute; or email: amcbrien@cdhowe.org