Immigrants and Workplace Training: Evidence from Canadian Linked Employer–Employee Data

• Published date: 01 April 2020
• Author: Benoit Dostie,Mohsen Javdani
• DOI: http://doi.org/10.1111/irel.12255
• Date: 01 April 2020

Immigrants and Workplace Training: Evidence

from Canadian Linked Employer–Employee Data

BENOIT DOSTIE and MOHSEN JAVDANI*

Job training is one of the most important aspects of skill formation and human capi-

tal accumulation. In this study, we use longitudinal Canadian linked employer–em-

ployee data to examine whether white/visible minority immigrants and Canadian-

born emplooyees experience different opportunities in two well-defined measures of

firm-sponsored training: on-the-job training and classroom training. While we find

no differences in on-the-job training between different groups, our results suggest

that visible minority immigrants are significantly less likely to receive classroom

training, and receive fewer and shorter classroom training courses, an experience

that is not shared by white immigrants. For male visible minority immigrants, these

gaps are entirely driven by their differential sorting into workplaces with fewer

training opportunities. For their female counterparts, however, they are mainly dri-

ven by differences that emerge within workplaces. We find no evidence that years

spent in Canada or education level can appreciably reduce these gaps. Accounting

for potential differences in career paths and hierarchical level also fails to explain

these differences. We find, however, that these gaps are only experienced by visible

minority immigrants who work in the for-profit sector, with those in the nonprofit

sector experiencing positive or no gaps in training. Finally, we show that other poor

labor market outcomes of visible minority immigrants, including their wages and

promotion opportunities, stem in part from these training gaps.

JEL codes: J24, L22, M53.

*The authors’affiliations are, respectively, HEC Montr

eal, Montreal, Canada. E-mail: benoit.dostie@hec.ca;

University of British Columbia—Okanagan, Kelowna, Canada. E-mail: mohsen.javdani@ubc.ca. The authors

thank participants at the Soci

et

e Canadienne de sciences 

economiques annual conference 2019 in Qu

ebec

City, the Quebec Interuniversity Centre for Social Statistics 2018 international conference in Montr

eal, the

Canadian Research Data Centre Network annual conference 2018 in Hamilton, and the Association for

Canadian Studies ''Statistics Canada: One Hundred Years and Counting" conference in Ottawa 2018.

The analysis presented in this paper was conducted at the Quebec Interuniversity Centre for Social Statistics

which is part of the Canadian Research Data Centre Network (CRDCN). The services and activities pro-

vided by the QICSS are made possible by the financial or in-kind support of the Social Sciences and

Humanities Research Council (SSHRC), the Canadian Institutes of Health Research (CIHR), the Canada

Foundation for Innovation (CFI), Statistics Canada, the Fonds de recherche du Qu

ebec and the Quebec uni-

versities. The views expressed in this paper are those of the authors, and not necessarily those of the

CRDCN, the QICSS or their partners.

INDUSTRIAL RELATIONS, DOI: 10.1111/irel.12255. Vol. 59, No. 2 (April 2020). ©2020 Regents of the

Universit y of Calif ornia. Published by Wiley Periodicals, Inc., 350 Main Street, Malden, MA 02148, USA,

and 9600 Garsington Road, Oxford, OX4 2DQ, UK.

275

Introduction

There is an extensive literature in economics that suggests immigrants, espe-

cially visible minority (or non-white) immigrants,

1

experience considerable dis-

advantages in the labor market compared to their native-born peers, and often

do not fully assimilate into the labor market even a few decades after immigra-

tion.

2

There also exists evidence that suggests occupational downgrading of

immigrants in the host country, which generates significant mismatch between

immigrants’qualifications and their jobs, is one of the main factors contribut-

ing to their adverse labor-market outcomes and slow labor-market integration

(e.g., Abramitzky, Boustan, and Eriksson 2014; Chiswick, Lee, and Miller

2005; Dustmann and Fabbri 2005; Green 1999; Kaushal et al. 2016).

For example, a recent Canadian study by Uppal and LaRochelle-C^

ot

e

(2014, p. 1) found that “among university-educated immigrants who did not

graduate in Canada or the United States, 43 percent of women and 35 percent

of men worked in occupations requiring a high school education or less. In

comparison, the same rates for the Canadian-born and for immigrants who

graduated in Canada or the United States varied between 15 percent and 20

percent.”Another study by Reitz, Curtis, and Elrick (2014) found that despite

dramatic increase in the proportion of immigrants with university degrees in

Canada, they remain at a substantial disadvantage in getting access to manage-

rial and professional occupations relative to Canadian-born workers. The same

study estimated that between 1996 and 2006 “the value of work lost to the

Canadian economy from immigrant skill under-utilization grew from about

$4.80 billion–$11.37 billion, annually”(Reitz, Curtis, and Elrick 2014, p. 1).

One way out of this underutilization and to improve immigrants’labor-mar-

ket outcomes is accumulation of additional skills in the post-migration period

1

Different countries use different terms to refer to their non-white/non-European population. In Canada,

they are referred to as a “visible minority,”which is defined as "persons, other than Aboriginal people, who

are non-Caucasian in race or non-white in color. The visible minority population in Canada consists mainly

of the following groups: Chinese, South Asian, Black, Arab, West Asian, Filipino, Southeast Asian, Latin

American, Japanese and Korean" (Statistics Canada 2015). The United States’equivalent classification

—“people of color”—is somewhat similar. However, it also includes Aboriginal Americans and African-

Americans, and often excludes people from the Middle East who are categorized as Caucasian in the United

States.

2

This extensive literature includes studies from different countries including Canada: Akbari (1992);

Baker and Benjamin (1997); Christofides and Swidinsky (1994); Howland and Sakellariou (1993); Hum and

Simpson (1999); Li (2001); Lian and Matthews (1998); Pendakur and Pendakur (1998); Pendakur and Wood-

cock (2010); Stelcner and Kyriazis (1995); Swidinsky and Swidinsky (2002); Europe: Adsera and Chiswick

(2007); Aeberhardt and Pouget (2010); Bauer and Zimmermann (1997); Bell (1997); Chiswick (1980); Dust-

mann and Fabbri (2003); Schmidt (1997); Silberman and Fournier (2007); and the United States: Borjas

(1985, 1991); Chiswick (1986); Smith (1990); Trejo (1997); see also Heath and Cheung (2007) for a com-

prehensive study of thirteen countries.

276 / BENOIT DOSTIE AND MOHSEN JAVDANI

(Borjas 2015). There exists growing evidence from different countries that sug-

gests obtaining further formal education in the host country after arrival pro-

vides compounded benefits for immigrants in terms of labor-market outcomes

(Banerjee and Verma 2009; Bratsberg and Ragan 2002; Duvander 2001; Ferrer

and Riddell 2008; Friedberg 2000; Gilmore and Le Petit 2008; Li 2001; Van

Tubergen and Van De Werfhorst 2007). These benefits seem to be well-under-

stood by immigrants. Adamuti-Trache and Sweet (2010, p. 2) report that “two-

thirds of the immigrants who arrived in Canada between October 2000 and

September 2001 indicated they had plans to pursue education and training in

Canada.”However, financial and time constraints faced by many immigrants

could also limit their ability to acquire further formal education in the host

country.

Alternatively, accumulation of skills and human capital through firm-spon-

sored training is another feasible mechanism that could help expedite and

improve immigrants’labor-market integration and play a crucial role in their

long-run labor-market success through better promotional opportunities and

higher occupational attainment. Training could also improve immigrants’

labor-market outcomes through reducing the employers’discounting of their

foreign credentials, as well as activating their human capital in a manner that

is more compatible to the needs of the labor market.

In this study, we therefore focus on an important but less-studied labor-mar-

ket issue related to immigrants: their access to firm-sponsored training (Duleep

2015). This remains an understudied topic even though job training is one of

the most important aspects of skill formation and human capital accumulation.

Heckman, Lockman, and Taber (1998) estimated that post-school investment,

including job training, accounts for more than half of lifetime human capital

accumulation. Training, if designed effectively and targeted correctly, is also

found to alleviate inequality by reducing the skill gap, and consequently the

earnings gap, between high-skilled and low-skilled workers (Heckman 2000).

There is also evidence that suggests training has significant impacts on worker

productivity (e.g., Bartel 1994; Dostie 2013), innovation (e.g., Bauernschuster,

Falck, and Heblich 2009; Dostie 2018), and wages and voluntary turnover

(e.g., Brown 1990; Lillard and Tan 1992; Lynch 1992). There also exists some

limited evidence, reviewed in more detail in the next section, suggesting that

immigrants’access to training programs can significantly improve their

employment and earnings opportunities, as well as decrease their reliance on

social benefits (Park 2011; Sarvim€

aki and H€

am€

al€

ainen 2016; Yoshida and

Smith 2005).

Using a longitudinal Canadian survey of workplaces and their employees

from 1999 to 2006, we estimate native–immigrant differences in probability,

duration, and intensity of two clearly defined training measures: on-the-job

Immigrants and Workplace Training / 277