Immigration, Poverty and Inequality in

Canada: What is new in the 2000s?

Garnett Picot and Feng Hou
Statistics Canada
2/24/2014 Statistics Canada Statistique Canada
2
The Context
! Immigrants had a significant impact on
national poverty and inequality trends
in the 1980s and 1990s

! Major policy changes in the 2000s
resulted in large shifts in immigrant
class and geographic distribution
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The research questions
What happened to immigrant low-income rate
in the 2000s?
Did changes in immigrant class and
characteristics contribute to the changes in
immigrant low-income rates?
Did immigration contribute to the decline in
the aggregate low-income rate in the 2000s?
Did immigration contribute to recent trends in
family income inequality?
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The direct and indirect effect of
immigration
! Direct effect on low income and inequality of
the total Canadian population: resulting from
changes in population shares of immigrants
and their economic outcomes
! Indirect effect: through altering the earnings
and earnings distribution of Canadian-born
workers
! The indirect effect is likely small
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Data and definitions
! The primary data source: Longitudinal
Administrative Databank (LAD),1995-2010
! Immigration status: the Canadian born and
long-term immigrants; immigrants in
Canada for 1-5 yrs, 6-10 yrs, 11-15 yrs
! Low-income status: a fixed low-income
measure (LIM) for the study period
! Family income inequality measures: CV
squared, Gini, Theil, and mean log
deviation
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Low-income rate in Canada

8
9
10
11
12
13
14
15
16
1
9
7
6

1
9
7
8

1
9
8
0

1
9
8
2

1
9
8
4

1
9
8
6

1
9
8
8

1
9
9
0

1
9
9
2

1
9
9
4

1
9
9
6

1
9
9
8

2
0
0
0

2
0
0
2

2
0
0
4

2
0
0
6

2
0
0
8

2
0
1
0

%
Q1: What happened to immigrant
low-income rate in the 2000s?
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Low-income trends by
immigration status
Low-income rate
Relative to the comparison group
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Regional differences in low-income
trends
Data source: Longitudinal Administrative Databank 1995-2010
8eglonal dlfferences ln low-lncome Lrends
2000 2010 2000 2010 2000 2010
1oLal 19 19 17 14 19 12
lmmlgranLs 1-13 years 33 32 23 13 30 17
Long-Lerm lmmlgranLs
and Canadlan born 14 13 17 13 19 12
lmmlgranLs/comparlson 2.31 2.11 1.33 1.13 1.37 1.42
1oronLo ManlLoba SaskaLchewan
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Q2: Did changes in immigrant
characteristics contribute to the
changes in immigrant low income?

A regression decomposition approach:
Low income status =
Immigrant class (FSW, PNP, Family, Refugees)
+ education + language + source regions
+ demographics
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Recent immigrants:

At the national level, 1/3 of the decline in
the low-income rate over the 2000s due to
changing education & source regions
Effect of characteristics varied by region
Effect of changes in immigrant class small
at the national level, but stronger in Alberta
and Saskatchewan. In Manitoba, low-
income rate declined the most among PNs
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Q3. Did immigration contribute to the
decline in the aggregate low-income
rate in the 2000s?
% contribution of immigrants
= [r
i, y2
*S
i, y2
! r
i, y1
*S
i, y1
]*100/ [R
y2
! R
y1
]

where r
i, y1
and r
i, y2
are the low-income rates of immigrants
in year 1 and year 2, S
i,y1
and S
i, y2
are immigrants
population shares in year 1 and year 2, and R
y1
and R
y2
are
the low-income rates for the population as a whole in year 1
and year 2.
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The direct effect of immigration on the
aggregate low-income trends in the 2000s
Canada -4.3 7
MonLreal -2.9 13
1oronLo 0.0 ---
vancouver -3.3 73
AccounLed for by
lmmlgranLs
ercenLage polnL changes ln
LoLal low-lncome raLe
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Family income inequality in Canada
Q4. Did immigration contribute to
recent trends in family income
inequality?
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Decompose changes in income
inequality indexes
Total change in an index (i.e., Theil)
= changes in between-group income differences
+ changes in income inequality within each group
+ changes in the population share of each group
+ joint change of the above three components

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Immigration effect on recent
trends in family income inequality
Immigration contributed little to the inequality
trend in the 2000s
lmmlgranLs
1-13 yrs
Long-Lerm
lmmlgranLs &
Canadlan born
Cv squared 0.274 4 96
1hell 0.042 3 93
Mean Log
devlaLlon
0.034 26 74
Change assoclaLed wlLh
1993-2000
change
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Summary: Immigrant low income
After large increases in the 1980s/1990s,
immigrant low-income rate declined in the
2000s
The decline was most evident in western
provinces, but little change in Toronto
Immigrants low-income position relative to
the Canadian-born did not improve
Changes in immigrant characteristics
accounted for 1/3 of the decline in low-
income rates among recent immigrants
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Summary: Immigration impact
Immigration was associated with 7% of the
decline in the aggregate low-income rate in
the 2000s, but accounted for all the increase
b/w 1980 and 2000.
The rise in family income inequality driven
primarily by the Canadian-born population,
immigration played little role