Labour Market Outcomes Among Refugees to Canada

Statistics Canada

Executive summary

Although not selected for economic reasons, refugees must survive economically in the receiving country and can make a significant economic contribution. Hence, their labour market outcomes are of interest. However, relatively few studies of the economic outcomes of refugees have been undertaken in either Canada or the United States. In particular, virtually no studies have been conducted on the variation in the economic outcomes of refugees from a range of source countries. This is the topic of this paper.

The focus is on the labour market outcomes of refugees from the 13 countries (or groups of countries) with the largest inflows to Canada over the 1980-to-2009 period. These groups include refugees from Afghanistan, China, Colombia, El Salvador, Ethiopia, the former Yugoslavia (as one group), Iran, Iraq, Pakistan, Poland, Somalia, Sri Lanka, and Viet Nam, Cambodia and Laos (the three countries as one group). In addition to determining the economic outcomes of refugees entering Canada during the three decades leading up to 2009, this analytical framework will be useful when data for more recent refugees (e.g., from Syria) become available.

With some exceptions, employment rates after five years in Canada were substantial among refugees. Male refugees from 7 of the 13 countries had employment rates over 75% five years after entry. However, those from Iran and Somalia had very low employment rates. Female refugees from Iraq, Afghanistan, Pakistan and Somalia also displayed very low employment rates.

Among the employed, the earnings of refugees from different countries varied greatly. Ten years after entering Canada, the refugee groups with the highest earnings (i.e., from the former Yugoslavia, Poland and Colombia) earned roughly double what those with the lowest earnings did (i.e., from Somalia, Afghanistan, Pakistan and China). Differences in outcomes were accentuated by the fact that groups with low (high) employment rates tended to have low (high) earnings levels among the employed, and groups with high employment rates tended to have high earnings among the employed. Furthermore, male and female refugees from the same country tended to have similarly low (high) relative earnings. These high correlations in men’s and women’s earnings across groups tended to exacerbate any poverty issues for refugees with low earnings.

Differences among the groups in observable human capital characteristics (notably educational attainment, age and knowledge of an official language), as well as in economic conditions, years in Canada and the program of entry to Canada, explained either none or very little of the much lower than average earnings of the refugee groups with the lowest earnings. Other unknown and unobserved factors accounted for the very low earnings. One possible explanation is that the education that these groups received in their home countries may have been of lower quality or have been perceived to be of lower quality by employers, thereby affecting the wages paid. The paper includes some evidence to support this notion. Other unobserved factors that may have contributed to the earnings differences among the groups could include

  • perceived or actual differences among refugee groups in source-country labour market experience
  • cultural factors affecting labour market success
  • discrimination
  • the acquisition of official language skills in Canada
  • the acquisition of occupational training in Canada
  • the quality of Canadian work experience
  • the support received from ethnic communities in Canada
  • the willingness to move to find a good job.

Refugees’ economic outcomes are often compared with those of family-class immigrants—the group they most closely resemble. Immediately after entry, refugees from all countries earned less than family-class immigrants. However, the five refugee groups with the highest earnings (i.e., from the former Yugoslavia; Poland; Colombia; Viet Nam, Cambodia and Laos; and El Salvador) displayed much more rapid earnings growth than did the family- and economic-class immigrants entering during the same period. After 15 years, they earned from 80% to 110% of what family-class immigrants did. The story was very different for refugees in the five lowest earnings groups (i.e., from Iraq, Somalia, Afghanistan, Pakistan and China). Even after 15 years in Canada, they earned from 50% to 70% of what family-class immigrants did. For these groups, observable differences in educational attainment, language ability, economic conditions and the other observed factors mentioned above accounted for very little of the earnings gap with family-class immigrants. Once again, unobserved and unknown factors played a major role.

Finally, the program under which refugees entered Canada seemed to matter, at least in the initial years. Even after differences in observable human capital (e.g., education and language), source country, and economic conditions were accounted for, privately sponsored refugees earned more than government-assisted refugees in the first year in Canada. While differences in human capital factors did not account for the initial earnings gap, they did account for most of the earnings gap 10 years after immigration. This suggests that the program of entry has little effect on earnings after a decade.

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