Executive summary
While several studies have documented the evolution of the earnings of immigrants in Canada over the last three decades, the evolution of immigrants’ wealth has received relatively little attention. Using data from the Survey of Financial Security of 1999, 2005, 2012 and 2016, this study fills this gap.
The study uncovers several key patterns.
First, there is little evidence that the wealth of immigrant families during their first years in Canada has deteriorated since 1999 relative to a comparison group of Canadian-born families of similar age and education.
Second, most of the wealth growth observed from 1999 to 2016 for various groups of immigrant families came from increases in housing equity. In contrast, the growth in the wealth of Canadian-born families during that period was driven by increases in both housing equity and private pension assets.
Third, synthetic cohort analyses suggest that the wealth of immigrant families tends to converge with that of Canadian-born families as time spent in Canada increases.
Fourth, while immigrant families’ rates of homeownership during their first few years in Canada were lower than those of comparable Canadian-born families, these rates converged during the subsequent 15 years. However, no convergence was observed for the incidence of registered pension plan (RPP) asset holdings.
Fifth, there is no evidence that immigrant families
- used payday loans to a greater extent than Canadian-born families of similar age
- usually paid off their credit card balances each month to a lesser extent than their Canadian-born counterparts
- had no credit cards as a result of refusals more often than Canadian-born families
- withdrew money from registered retirement savings plans (RRSPs) (for reasons other than buying a home, financing education or acquiring a registered retirement income fund [RRIF]) more often than Canadian-born families.
Sixth, the debt-to-income ratios of immigrant and Canadian-born families increased substantially from 1999 to 2016. In 2016, immigrant families had markedly higher debt-to-income ratios than their Canadian-born counterparts. However, debt-to-asset ratios grew moderately during that period. This suggests that a large portion of the increase in the debt-to-income ratios was driven by larger mortgages.
Finally, low-income rates among recent immigrant families dropped after the mid-2000s. As a result, the percentage of people living in families that were in low income and had no financial wealth also dropped among this group.