The Usability of Foreign Qualifications and Skills in the Canadian Labour Market – Results Using Piaac

The Canadian society is characterised by a plurality of immigrants and the Canadian migration policy focuses on economic criteria, qualifications and skills (cf. Walker 2007; Guo/Shan 2013). The aim of this project is to gain insights how immigrants use their foreign qualifications and skills in the labour market. Income differences and over-education of immigrants have been mainly explained by the imperfect transferability of human capital across country borders (cf. e.g. Li 2008), depending on how closely the country of origin compares to the host country in terms of economic conditions, educational systems, industrial structure, institutional settings, language, etc.

Using quantitative analyses and case studies, the project identifies approaches and methods that employers use to make decisions regarding foreign qualification recognition. This presentation focuses on quantitative analyses of PIAAC data to investigate if the assumptions of human capital theory (Becker 1964) or the theories of signalling (Spence 1973) and screening (Stiglitz 1975) apply to the Canadian labour market. Concrete the Mincer wage regression (1974) is used to analyse impact factors of individual wages, focusing on migration status. The findings confirm the discrimination of immigrants in regards to their current income. Furthermore, a comparison of immigrants with native-born Canadians highlights the issues of qualification and skill mismatch. These results indicate that immigrants disproportionately face the problem of qualification mismatch compared to the domestic population. Differences in the skill mismatch between the two groups are smaller. The study indicates that both qualification and skill mismatch have a negative income effect, confirming human capital theory, which assumes the lower usability of foreign qualifications due to the lack of host country specific human capital. The results also indicate that the signalling effect of foreign qualifications is lower than the one of domestic qualifications.