‘Compared to the U.S., university-educated recent immigrants are more likely to experience over-qualification in Canada’
Highly educated immigrants in Canada are not achieving the same labour market success as their counterparts in the United States, according to a new report from the Fraser Institute.
Despite Canada’s strong record of attracting highly educated newcomers, the study finds that these immigrants face persistent challenges in employment and earnings compared to both native-born Canadians and similarly qualified immigrants in the U.S. In 2021, 55% of recent immigrants to Canada held at least a bachelor’s degree, compared to 45% of recent immigrants to the U.S. In contrast, only 33% of native-born Canadians aged 25 to 34 had at least a bachelor’s degree, while 38% of native-born Americans met this threshold.
“Canada has been relatively successful in attracting highly educated immigrants, i.e., those with a bachelor’s degree or higher. Indeed, as a share of its workforce, Canada has a higher percentage of immigrants with a bachelor’s degree or higher than does the United States,” say Fraser Institute Senior Fellow Jock Finlayson and Senior Fellow and Addington Chair in Measurement, Steven Globerman.
Despite this, “highly educated workers in the U.S. perform better in terms of both employment status and earnings than do their counterparts in Canada, where the relevant benchmarks are the employment status and earnings of the native-born in the respective countries,” they say.
There’s been a surge in Canadian employers’ dependence on temporary foreign workers in recent years, according to a previous report. And Canada stands to benefit after United States President Donald Trump announced a fee of US$100,000 on a skilled worker visa program in Canada’s neighbour to the south, according to experts.
Employment rates, overqualification
In Canada, recent immigrants with a bachelor’s degree or higher have higher employment rates than the general population, but still lag behind highly educated native-born Canadians. In the report titled The Gap in the Labour Market Performance of Highly Educated Immigrants in Canada Relative to the United States—and How to Narrow It, Finlayson and Addington note that in 2021, the employment rate for highly educated, younger native-born Canadians was 87.4%, compared to 79.1% for recent highly educated immigrants.
“In every census year reported, the employment rate for highly educated native-born Canadians exceeds the employment rate for highly educated immigrants,” they say.
The earnings gap is also pronounced. The median employment income in 2020 for visible minority immigrants in Canada with a bachelor’s degree or higher was $57,200, compared to $68,300 for native-born Canadians with the same level of education. For those with a master’s degree, the gap was $65,500 for immigrants versus $84,400 for the native-born. Among doctorate holders, immigrants earned $84,000, while native-born Canadians earned $100,000.
In contrast, highly educated immigrants in the U.S. earned more than their native-born peers. In 2022, the median household income for highly educated immigrants in the U.S. was $122,000, compared to $113,000 for native-born Americans.
The report attributes these differences to several factors, including difficulties with the recognition of foreign credentials, higher rates of over-qualification among immigrants, and differences in the business environment. Finlayson and Globerman note, “University-educated immigrants in Canada, especially recent arrivals, face disproportionately high rates of over-qualification for their jobs compared to non-immigrants,” and that “compared to the U.S., university-educated recent immigrants are more likely to experience over-qualification in Canada.”
That echoes the findings of a 2024 C.D. Howe Institute report.
Finlayson and Addington conclude: “Even though Canada has been successful in attracting large numbers of newcomers with credentials in STEM disciplines (and other high-skill fields), the labour market performance of such immigrants has been inferior compared to that of similar first-generation immigrants in the United States.”
