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Why Do Skilled Immigrants Struggle in the Labor Market?

Canadian applicants who differed only by name had substantially different callback rates: those with English-sounding names received interview requests 40 percent more often than applicants with Chinese, Indian, or Pakistani names (16 percent versus 11 percent).

Ethnic discrimination may explain a significant part of why recent skilled immigrants have much poorer prospects than non-immigrants in the Canadian labor market. In Why Do Skilled Immigrants Struggle in the Labor Market? A Field Experiment with Six Thousand Resumes (NBER Working Paper No. 15036), Philip Oreopoulos estimates the effect of various individual attributes on the likelihood that a job applicant will receive an interview request. He finds that interview request rates for English-named applicants with Canadian education and experience were more than three times higher than for resumes with Chinese, Indian, or Pakistani names with foreign education and experience (5 percent versus 16 percent) -- but they were no different than for foreign applicants from Britain. Employers also valued experience acquired in Canada much more than experience acquired in a foreign country. Changing foreign resumes to include only experience from Canada raised callback rates to 11 percent. And, among resumes listing four to six years of Canadian experience, whether an applicant’s degree was from Canada, or whether the applicant obtained additional Canadian education had no impact on the chances for an interview request.

Canadian applicants who differed only by name had substantially different callback rates: those with English-sounding names received interview requests 40 percent more often than applicants with Chinese, Indian, or Pakistani names (16 percent versus 11 percent). The “discrimination” was particularly pronounced in administrative, finance, and retail jobs.

Most immigrants come to Canada on a point system, which attempts to attract the most educated and experienced foreign employees, who are in demand by the industry. However, for a given level of education, the earnings gap between recent immigrants and natives is more than 50 percent. To try to understand this, Oreopoulos sent out over 6000 mock resumes to job postings in Toronto, all of which required an undergraduate degree and several years of work experience. The job postings came from a range of industries, and the mock resumes were carefully designed to reflect actual resumes supplied by recent immigrant and Canadian native job hunters. Oreopoulos randomly assigned each applicant a common Chinese, English, Indian, or Pakistani name, as well as either foreign or Canadian education and work experience and other applicant characteristics. By doing so, he was able to investigate the effect of particular attributes on an employer's decision to call an applicant back for an interview.

Oreopoulos further finds that the evaluators' gender and ethnicity were not driving the differences in callback rates: in fact, evaluators with Asian or Indian accents and names were slightly more likely to call back an applicant with an English name. He concludes that, for resumes listing more than five years of experience, “an applicant's name matters considerably more than his additional education, multiple language skills, and extracurricular activities” in the Canadian labor market.

-- Alex Teytelboym