Immigration System, Labor Market Structures, and Overeducation of High-Skilled Immigrants in the United States and Canada

Yao Lu , Columbia University
Feng Hou, Statistics Canada

Why do high-skilled Canadian immigrants lag behind in labor market outcomes compared to their U.S. counterparts in spite of a merit-based immigration selection system and a more integrative context? The present study investigates a mismatch between immigrants' education and occupations as an explanation. Using comparable data, we find that university-educated Canadian immigrants are consistently much more likely to be overeducated than their U.S. peers. Also, whereas labor market demand reduces overeducation in both countries, the role of supply-side factors varies: a higher supply of university-educated immigrants is positively associated with overeducation in Canada but not in the U.S., pointing to an oversupply of high-skilled immigrants relative to a smaller economy in Canada. Furthermore, in Canada the overeducation rate is significantly lower for immigrants that undergo employer selection than those who were admitted directly from abroad based on the point system, suggesting the role of an employment-based immigration system in coordinating immigrant supply with domestic demand.

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 Presented in Session 24. Immigrant Integration and Incorporation