immigration, poverty and inequality in canada: what is new in the 2000s?

Immigration, Poverty and Inequality in Canada: What is new in the 2000s?

Garnett Picot and Feng Hou

Statistics Canada

2/24/2014 Statistics Canada Statistique Canada 2

The Context

Immigrants had a significant impact on national poverty and inequality trends in the 1980s and 1990s

Major policy changes in the 2000s

resulted in large shifts in immigrant class and geographic distribution


The research questions

What happened to immigrant low-income rate in the 2000s?

Did changes in immigrant class and characteristics contribute to the changes in immigrant low-income rates?

Did immigration contribute to the decline in the aggregate low-income rate in the 2000s?

Did immigration contribute to recent trends in family income inequality?


The direct and indirect effect of immigration

Direct effect on low income and inequality of the total Canadian population: resulting from changes in population shares of immigrants and their economic outcomes

Indirect effect: through altering the earnings and earnings distribution of Canadian-born workers

The indirect effect is likely small


Data and definitions The primary data source: Longitudinal

Administrative Databank (LAD),1995-2010 Immigration status: the Canadian born and

long-term immigrants; immigrants in Canada for 1-5 yrs, 6-10 yrs, 11-15 yrs

Low-income status: a fixed low-income measure (LIM) for the study period

Family income inequality measures: CV squared, Gini, Theil, and mean log deviation


Low-income rate in Canada

8

9

10

11

12

13

14

15

16

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

%

Q1: What happened to immigrant low-income rate in the 2000s?


Low-income trends by immigration status Low-income rate Relative to the comparison group


Regional differences in low-income trends

Data source: Longitudinal Administrative Databank 1995-2010

Regional differences in low-income trends

2000 2010 2000 2010 2000 2010

Total 19% 19% 17% 14% 19% 12%

Immigrants 1-15 years 33% 32% 23% 15% 30% 17%

Long-term immigrants and Canadian born 14% 15% 17% 13% 19% 12%

Immigrants/comparison 2.31 2.11 1.33 1.15 1.57 1.42

Toronto Manitoba Saskatchewan


Q2: Did changes in immigrant characteristics contribute to the changes in immigrant low income? A regression decomposition approach: Low income status = Immigrant class (FSW, PNP, Family, Refugees) + education + language + source regions + demographics


Recent immigrants: At the national level, 1/3 of the decline in

the low-income rate over the 2000s due to changing education & source regions

Effect of characteristics varied by region Effect of changes in immigrant class small

at the national level, but stronger in Alberta and Saskatchewan. In Manitoba, low-income rate declined the most among PNs


Q3. Did immigration contribute to the decline in the aggregate low-income rate in the 2000s?

% contribution of immigrants = [ri, y2*Si, y2 ri, y1*Si, y1]*100/ [Ry2 Ry1] where ri, y1 and ri, y2 are the low-income rates of immigrants in year 1 and year 2, Si,y1 and Si, y2 are immigrants population shares in year 1 and year 2, and Ry1 and Ry2 are the low-income rates for the population as a whole in year 1 and year 2.


The direct effect of immigration on the aggregate low-income trends in the 2000s

Canada -4.3 7%

Montreal -2.9 15%Toronto 0.0 ---Vancouver -3.5 75%

Accounted for by immigrants

Percentage point changes in total low-income rate


Family income inequality in Canada

Q4. Did immigration contribute to recent trends in family income inequality?

2/24/2014 14

Decompose changes in income inequality indexes

Total change in an index (i.e., Theil) = changes in between-group income differences + changes in income inequality within each group + changes in the population share of each group + joint change of the above three components

2/24/2014 15

Immigration effect on recent trends in family income inequality

Immigration contributed little to the inequality trend in the 2000s

Immigrants 1-15 yrs

Long-term immigrants & Canadian born

CV squared 0.274 4% 96%

Theil 0.042 5% 95%Mean Log deviation

0.034 26% 74%

Change associated with 1995-2000 change


Summary: Immigrant low income After large increases in the 1980s/1990s,

immigrant low-income rate declined in the 2000s

The decline was most evident in western provinces, but little change in Toronto

Immigrants low-income position relative to the Canadian-born did not improve

Changes in immigrant characteristics accounted for 1/3 of the decline in low-income rates among recent immigrants


Summary: Immigration impact

Immigration was associated with 7% of the decline in the aggregate low-income rate in the 2000s, but accounted for all the increase b/w 1980 and 2000.

The rise in family income inequality driven primarily by the Canadian-born population, immigration played little role

immigration, poverty and inequality in canada: what is new in the 2000s?

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