Immigration of skilled workers to Canada: The under-utilized potential

The immigration policy of Canada has been very effective in attracting highly skilled immigrants, resulting in an increase in educational attainment levels of successive entering immigrant cohorts. However, due to lack of recognition of foreign credentials and work experience, the utilization of the immigrants’ skills remains below its potential. This results in a substantial number of highly skilled immigrants working in occupations that are completely unrelated to their previous education and training. Even when skilled immigrants are able to get their credentials and work experience recognized, they face a wage penalty compared to similarly qualified native-born workers. This differential in the relative earnings of immigrants reflects the discounted market value of credentials and experience gained abroad by immigrants. The lower market value of skills earned abroad is explained by differences in education quality of immigrants depending on where they received their highest degree.