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Incidence and Returns to Apprenticeship Training in Canada: The Role of Family Background and Immigrant Status

Ted McDonaldDepartment of EconomicsUniversity of New Brunswick Christopher WorswickDepartment of Economics Carleton University

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Background: Immigration and the Skilled Trades

Canada historically has relied extensively on immigration to help meet the demand for skilled tradespeople, but selection of skilled immigrants has shifted in favor of tertiary qualifications – esp. 1990s reforms to the points system. ◦ Bill C50 (2008) makes it easier for immigrants with skills in short

supply to immigrate to Canada.

Composition of immigrant inflows by source country has changed very significantly over time, in large measure towards immigrants from Asia and away from UK/Europe (regions from where many skilled tradespeople had originated)

Given the evolution of immigration flows, much of the demand for skilled tradespeople must be met by the resident Canadian population, an increasing proportion of whom have non-European backgrounds.

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Research QuestionsWhat is the incidence of apprenticeship completion

among immigrant and non-immigrant Canadians?◦ What does the changing composition of immigrants

over time mean for the takeup of apprenticeships by the children of these immigrants – i.e., are there intergenerational effects?

What are the rates of return and employment outcomes of those individuals who have completed an apprenticeship, and do they vary by immigrant status?

The main focus of this paper is on apprenticeships obtained in Canada by child arrivals and second generation Canadians◦ For tractability, we do not consider the issues of

credential recognition, nor the related decision by adult arrivals to return to education after arriving in Canada

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Data

Confidential Masterfile of the 2006 Census of Canada (20% sample, n ~ 6 million)◦ Completion of the census questionnaire is

compulsory◦ ‘Highest level of education’ specifically

identifies apprenticeships for the first time in 2006

◦ Country in which highest level of education was obtained is reported for the first time in 2006

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Strengths◦ Very detailed data on field of study, current

occupation, annual earnings, weeks of work, sources of income

◦ Precise data on country of birth, year of arrival, age at arrival

Limitations◦ No data on educational qualifications other than

the highest level obtained◦ No data on educational qualifications

undertaken but not completed◦ No data on educational qualifications of parents

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Methods We identify four groups and focus on the latter three

◦ Immigrants arriving as adults◦ Immigrants arriving as youth◦ Canadian born 2nd generation◦ Canadian born 3rd generation or later

We focus only on men. Apprenticeship rates for women are in the order of 2%, and a large majority of women apprenticeship holders completed apprenticeships in hair styling and similar service sector fields that are relatively low-paid

We include controls for 5yr cohort of arrival (landing) in Canada, region of birth (1st gen), region of birth of father (2nd gen). With a single cross-section, we cannot disentangle cohort and years-since-arrival effects.

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Intergenerational effects for 1st gen child arrivals and 2nd gen, aged 29-44 years in 2006◦ The proportion of male immigrants aged 45-64

and born in the respondent’s father’s country of birth who have completed an apprenticeship

◦ This variable is set to zero for individuals with a father born in Canada (3rd+ gen and mixed background individuals)

This effect is identified in the presence of controls for broad region of birth based on inter-country variation within these regions (120+ countries)

Ideally, we would use 1981 or 1986 data to construct these measures. We would need 1980s census files to consider intergenerational income effects

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Possible transmission channels

Father-son information and role modeling

Ethnic community and/or peer effects

Employer effects – apprenticeship enrolment and completion requires finding an employer willing to take on the apprentice. This may be more easily done through one’s own family or ethnic peer group

Unobserved country-specific heterogeneity

1st gen

(adult arr) 1st gen

(child arr) 2nd gen 3rd+ gen MEN Less than HS 0.14 0.13 0.12 0.19 HS Only 0.19 0.23 0.24 0.24 Apprenticeship 0.05 0.06 0.07 0.07 Other Trade Cert. 0.06 0.07 0.06 0.11 Diploma 0.21 0.25 0.25 0.21 University Degree 0.21 0.19 0.19 0.13 Higher Degree 0.13 0.07 0.06 0.04 WOMEN Less than HS 0.18 0.13 0.09 0.16 HS Only 0.23 0.27 0.25 0.27 Apprenticeship 0.02 0.02 0.02 0.02 Other Trade Cert. 0.05 0.06 0.05 0.08 Diploma 0.24 0.28 0.31 0.28 University Degree 0.20 0.19 0.23 0.15 Higher Degree 0.08 0.05 0.05 0.03

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Table 1: Educational attainment by generation of immigrant arrival in Canada (aged 28-65)

Table 2: Average Weekly Earnings ($) by Generation of Immigrant Arrival in Canada and Level of Education

1st gen

(adult arr) 1st gen

(child arr) 2nd gen 3rd+ gen MEN Less than HS 793.97 957.16 965.50 864.97 HS Only 833.75 1082.95 1024.57 995.22 Apprenticeship 1020.24 1161.65 1183.76 1136.19 Other Trade Cert. 917.9 1091.97 1036.25 962.30 Diploma 1038.31 1203.43 1196.71 1174.19 University Degree 1217.51 1957.4 1771.05 1739.98 Higher Degree 1739.93 2652.52 2469.67 2415.21 WOMEN Less than HS 526.89 582.47 602.59 518.27 HS Only 603.18 751.49 721.38 645.21 Apprenticeship 606.45 651.66 618.62 575.08 Other Trade Cert. 607.34 634.13 622.71 560.98 Diploma 746.04 849.82 828.47 778.88 University Degree 861.98 1179.48 1138.86 1087.14 Higher Degree 1150.81 1646.19 1601.85 1478.94

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Table 3: Proportion of individuals who completed an apprenticeship, by region of birth

MEN

Region of Birth

1st Gen: own region of birth (adult arrival)

1st Gen: own region of birth (child arrival)

2nd Gen: father’s region

of birth USA 0.04 0.06 0.08 UK/Ireland/Aus 0.11 0.07 0.07 Western Europe 0.09 0.09 0.07 Eastern Europe 0.07 0.07 0.07 Western Asia 0.03 0.04 0.03 Japan/Korea//HK 0.02 0.01 0.03 Other East Asia 0.03 0.03 0.03 South Asia 0.02 0.03 0.02 Americas 0.05 0.05 0.04 Caribbean 0.07 0.05 0.03

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Incidence of completed apprenticeship – Logit (MEN)

age 28-65 age 28-65, no FB who

arrived as adults age 28-44, no FB

who arrived as adults OR p-value OR p-value OR p-value First Generation 1.092 0.022 0.811 0.029 0.626 0.040

arr0206 0.443 0.000 n/a n/a arr9701 0.569 0.000 n/a n/a arr9296 0.793 0.000 0.744 0.344 0.782 0.390 arr8791 0.976 0.545 0.959 0.760 1.003 0.981 arr8286 1.000 -- 1.000 -- 1.000 -- arr7781 1.088 0.046 1.125 0.278 1.131 0.213 arr7276 1.111 0.008 1.091 0.392 1.080 0.415 arr6771 1.209 0.000 1.066 0.530 1.045 0.694 arr6266 1.208 0.000 1.118 0.282 1.049 0.653

arr61p 1.042 0.322 1.278 0.011 0.807 0.801 Own Region of Birth (1st gen)

UK/Ireland/Aus/NZ 1.000 -- 1.000 -- 1.000 -- USA 0.461 0.000 0.703 0.000 0.894 0.351

Western Europe 1.131 0.000 1.301 0.000 1.076 0.422 Eastern Europe 1.140 0.000 1.133 0.078 1.029 0.781

Western Asia 0.568 0.000 0.760 0.054 0.879 0.372 South Asia 0.351 0.000 0.455 0.000 0.511 0.000 Jap/Kor/HK 0.244 0.000 0.226 0.000 0.245 0.000

Rest of East Asia 0.353 0.000 0.528 0.000 0.644 0.003 Americas 0.792 0.000 0.845 0.051 0.860 0.170

Caribbean 0.957 0.275 0.866 0.120 0.894 0.381 Pacific 0.695 0.001 0.807 0.397 0.888 0.248

Africa except RSA 0.456 0.000 0.431 0.000 0.393 0.001 South Africa 0.632 0.000 0.737 0.140 0.565 0.001

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Incidence of completed apprenticeship – Logit (MEN)

Second Generation 0.893 0.000 0.898 0.000 0.684 0.000 Father’s region of birth (2nd gen)

UK/Ireland/Aus/NZ 1.000 -- 1.000 -- 1.000 -- USA 1.016 0.720 1.015 0.736 0.869 0.015

Western Europe 1.256 0.000 1.260 0.000 1.287 0.000 Eastern Europe 0.993 0.843 0.999 0.968 1.147 0.007

Western Asia 0.581 0.003 0.585 0.004 0.748 0.074 South Asia 0.408 0.000 0.410 0.000 0.505 0.000

Jap/Kor/HK 0.565 0.001 0.570 0.001 0.483 0.009 Rest of East Asia 0.396 0.000 0.396 0.000 0.467 0.000

Americas 0.861 0.214 0.867 0.237 0.875 0.482 Caribbean 0.559 0.000 0.560 0.000 0.587 0.001

Pacific 0.397 0.079 0.395 0.078 0.521 0.000 Africa except RSA 0.385 0.000 0.385 0.000 0.415 0.001

South Africa 0.813 0.413 0.808 0.399 0.653 0.000 App’ships in father’s gen-1st gen (10pt) n/a n/a 1.034 0.014 App’ships in father’s gen-2nd gen (10pt) n/a n/a 1.022 0.008

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Determinants of log earnings - OLS (MEN)

age 28-65, no FB who arrived as

adults apprenticeship holders

only coef p-value coef p-value Highest education

Less than HS -0.140 0.000 n/a HS only 0.000 -- n/a

Apprentice 0.127 0.000 n/a Apprentice*1st gen 0.005 0.745 n/a Apprentice*2nd gen 0.010 0.312 n/a

Other trades 0.027 0.000 n/a Diploma 0.171 0.000 n/a Degree 0.456 0.000 n/a

Higher degree 0.711 0.000 n/a 1st gen -0.007 0.699 -0.047 0.502

arr0206 n/a n/a arr9701 n/a n/a arr9296 -0.179 0.011 -0.036 0.862 arr8791 0.000 -- 0.000 -- arr8286 -0.049 0.024 0.078 0.388 arr7781 0.006 0.749 0.073 0.343 arr7276 0.013 0.452 0.035 0.645 arr6771 0.032 0.075 0.174 0.019 arr6266 0.022 0.255 0.162 0.029

arr61p 0.016 0.380 0.110 0.133

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Determinants of log earnings - OLS (MEN)

Own place of birth (1st gen)

UK/Ireland/Aus/NZ 0.000 -- 0.000 -- USA -0.022 0.173 -0.155 0.006

Western Europe 0.030 0.005 -0.015 0.635 Eastern Europe 0.017 0.393 -0.119 0.094

Western Asia -0.054 0.069 -0.351 0.000 South Asia -0.069 0.002 -0.259 0.054

Jap/Kor/HK -0.018 0.371 -0.252 0.028 Rest of East Asia -0.051 0.006 -0.356 0.000

Americas -0.022 0.197 -0.088 0.167 Caribbean -0.115 0.000 -0.267 0.000

Pacific -0.080 0.157 0.039 0.812 Africa except RSA 0.046 0.067 -0.080 0.494

South Africa -0.015 0.742 -0.102 0.675

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Determinants of log earnings - OLS (MEN)

Second gen. 0.002 0.690 0.003 0.863 Father’s region of birth (2nd gen)

UK/Ireland/Aus/NZ 0.000 -- 0.000 -- USA -0.041 0.002 -0.062 0.139

Western Europe 0.023 0.001 -0.008 0.721 Eastern Europe 0.036 0.000 0.024 0.393

Western Asia -0.040 0.232 -0.139 0.573 South Asia 0.000 0.986 -0.010 0.916

Jap/Kor/HK 0.060 0.029 0.189 0.304 Rest of East Asia 0.040 0.003 -0.013 0.855

Americas -0.003 0.873 -0.102 0.166 Caribbean -0.113 0.000 -0.287 0.004

Pacific -0.112 0.113 0.033 0.490 Africa except RSA -0.027 0.402 -0.087 0.398

South Africa -0.051 0.402 -0.301 0.279

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Earnings regressions - extensions

Including 18 indicator variables for field of study has little substantive effect on the 1st and 2nd generation immigrant effects◦ The earnings gap of immigrants with apprenticeships who

were born in Western Asia or in the developing parts of East Asia are a little smaller in magnitude, suggesting that differences in field of study explain a small part of the earnings discrepancy.

Similarly, including 10 indicator variables for occupation of employment has little substantive effect

Controlling for weeks of work during the reference year also has no effect on the immigrant earnings gap

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Implications for policy

Selection of immigrants based on tertiary qualifications and the changing composition by source country have contributed to lower takeup of apprenticeships by immigrant children. Source country differences persist for Cdn-born 2nd generation◦ The magnitude of these effects might become more important

over the next decade, as the children of 90s-00s immigrants enter the workforce

Policies similar to those implemented to attract women into skilled-trade apprenticeships may be needed for younger immigrants and ethnic minority groups

1st and 2nd gen. minorities may benefit from employment assistance following completion of an apprenticeship to help guide them into skilled trades