Point System Selection Inefficiency
Observational StudyReview
Point-based immigration selection systems grant entry based on human capital attributes like tertiary education, yet admitted skilled immigrants experience high relative unemployment and earnings penalties compared to native-born workers.
Picture this
Think of a university admissions office accepting students based purely on high exam scores without checking if their credits transfer or if local classes match their past training. The accepted students arrive with impressive grade reports on paper, but find themselves forced to retake introductory classes because local institutions do not recognize their transcripts.
What the evidence says
Recent immigrants experienced an unemployment rate of 10.4% versus 5.9% for native-born workers. Median earnings for recent immigrants were 36% lower than native-born workers ($21,000 vs. $33,000), and controlling for educational attainment expanded the relative wage gap to 48% lower earnings, despite 60% of recent immigrants holding undergraduate degrees compared to 20% of native-born peers.
- Who was studied
- N = 127,149 individuals aged 25-39 from the 2006 Public-Use Canadian Census microdata (labor force participants in Canada).
- How
- Cross-sectional census data analysis using ordinary least squares and quantile regressions to estimate unemployment and median earnings gaps conditional on age, education, and city of residence.
What to do
Reconfigure point-based immigration policies to require pre-selection credential validation or host-country employer sponsorship before awarding human capital points.
From the source
"Conditioning on highest degree completed, therefore, causes the relative wage gap between recent immigrants and non-immigrants to increase, from 36 percent lower wages for immigrants to 48 percent."
2f1d6051-ac22-4384-a076-c1bbe1ab4f8b-Why Do Skilled Immigrants Struggle in the Labor Market-.pdf