Early earnings trajectories of international students after graduation from postsecondary programs: evidence from Canadian administrative data

ABSTRACT

Using two administrative datasets, this study investigates the role of various pre-graduation characteristics in accounting for earnings differences between international and domestic students during their first five years after graduation from Canadian postsecondary institutions. It demonstrates that international students earned less than domestic students when they worked in Canada after graduation. Fewer years of pre-graduation work experience and lower levels of pre-graduation earnings among international students accounted for most of their observed disadvantage in post-graduation earnings. We discuss possible interpretations of the results and the implications in reducing the earnings gaps between international and domestic students after graduation.

KEYWORDS:

• International students
• higher education
• return to education
• post-graduation earnings
• pre-graduation work experience

Acknowledgements

We gratefully acknowledge comments from the editor and two anonymous referees. We would like to thank Michael Farrell, Eric Fecteau, Rebeka Lee, Marina Prokopenko and Mikal Skuterud for their advice and suggestions on an earlier version of this paper which was released as a report at Statistics Canada. The opinions expressed herein do not represent the opinions of Statistics Canada.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 In Australia, policies were changed in the late 2000s to restrict the study-to-immigration pathway to international students with strong English proficiency, advanced degrees, employer sponsorship and work experience (Hawthorne and To 2014). For economic immigrant selection in Canada, Canadian study remains a minor selection criterion relative to other selection factors under the Express Entry system introduced in 2015. As of November 2016, Canadian study experience can add up to 30 points out of a total of 600 points for human capital factors, depending on the degree level, whereas Canadian work experience can receive up to 180 points if the applicant also holds an advanced degree and has foreign work experience (IRCC 2020).

2 Source region, proficiency in English or French, age at arrival, level of education and field of study have been identified as important determinants to the earnings gaps between international and domestic graduates (Chen and Skuterud 2018; Frenette, Lu, and Chan 2019; Lu and Hou 2019). Discrimination is also likely to be an important determinant (Oreopoulos 2011). However, as it is difficult to identify with administrative data, this factor is not considered in this study.

3 Most postsecondary education institutions in Canada are public and funded by a province or territory. In the 2015/2016 academic year, about 2 million students (both international and domestic) were enrolled in a provincially funded postsecondary institution (Statistics Canada n.d.). According to Martin and MacLaine (2016), there were 1,300 private career colleges across Canada focusing on career-oriented vocational training, with over 170,000 students enrolled annually. However, information on the number of international students graduating from these institutions is unavailable.

4 Self-employment income is excluded from this study. A tiny share of students had non-zero self-employment income right after graduation. Because most of these students also had employment income from paid jobs, inclusion of self-employment income did not significantly affect the propensity for an international student to be employed in Canada.

5 Students may have a different immigrant status at the time of entry or enrolment, but the immigrant status at initial enrolment could not be used because of data limitations. Comprehensive enrolment data are available from the 2009/2010 school years in the PSIS. This does not allow the immigrant status at initial postsecondary enrolment to be identified for those who graduated in the early 2010s.

6 This study excludes graduates with other short-program credentials or associate degrees. It further excludes graduates from the following programs: basic education and skills programs; apprenticeship programs; post-career, technical or training programs; pre-university CEGEP programs; and qualifying programs. These programs ‘are either related to the in-class components of apprenticeship training, are non-postsecondary in nature, do not result in an educational qualification, or they specifically prepare students to enter another postsecondary program rather than the labour market’ (Statistics Canada 2019). Other exclusions include graduates from postsecondary programs in the territories because of limited data availability for the 2010 and 2011 graduate cohorts, and graduates who studied in the field of personal improvement and leisure or in a health-related residency program, because very few international students were in this field or program.

7 The unbalanced sample was used because it provides a fuller picture of graduates, since those who did not work in all five years are also captured in the analysis. When the balanced sample of graduates who had positive earnings in each of the first five years after graduation was used, observed differences were smaller. However, the qualitative findings from regression analyses with the unbalanced sample and with the balanced sample were similar (Table A3 in the online appendix). The sample does not exclude those who returned to Canadian postsecondary education after graduating in the years 2010 to 2012. The majority of those who returned to postsecondary programs had non-zero earnings, although they had lower earnings, on average, than those who did not return to programs. When returning graduates were excluded from the sample, average post-graduation earnings increased for all three immigration groups. However, the qualitative findings from regression analyses remained similar.

8 For pre-graduation earnings, two more measures were explored. The first one was annual earnings one year prior to graduation, assigning 0 for those who did not file a tax return in the year. The other one was the most recent positive earnings before graduation, assigning 0 for those who did not work at a paid job or did not file a tax return within 10 years before graduation. These two measures of pre-graduation earnings had higher correlations with post-graduation earnings than the highest annual earnings within 10 years before graduation. Our main results based on the highest annual earnings are conservative and close to a lower bound for the role of pre-graduation earnings in predicting post-graduation earnings.

9 The number of observations is rounded to the nearest 100.

10 Dustmann and Görlach (2016) also provide a comprehensive overview of the economics of temporary migrations.

11 Retention rates of international students in Canada vary by study level and field of study (Choi, Crossman, and Hou 2021a). More than half of international students who first came to Canada between 2005 and 2009 for an advanced degree program became landed immigrants in Canada within 10 years (Choi, Crossman, and Hou 2021b).

12 Out-migration cannot be estimated with our datasets. Post-graduation outcomes are measured using individual tax return data. When a student is absent from the tax data, this could be due to either out-migration or non-filing of a tax return while present in Canada.

13 The earnings gaps were statistically significant. To check statistical significance, a simple regression model was estimated separately for earnings at years 1 and 5 after graduation. The results were presented in Table 3 (estimates for Model 1).

14 The differences in the earnings gap between an advanced degree and a lower level of education were statistically significant at the 5% significance level. We estimated a linear regression model, controlling for immigrant status, level of study and their interaction terms and performed Wald tests to examine the statistical significance of this statement.

15 The earnings gaps between international and domestic students and the differences in the earnings gaps between fields of study mentioned above were statistically significant at the 5% significance level. Wald tests were performed after a linear regression model was estimated with the covariates of immigrant status, level of study and their interaction terms.

16 Martin and Rouleau (2020) explored work-integrated learning in Canada using data from the Longitudinal and International Study of Adults. They found that, compared with non-visible minorities, visible minorities were less likely to be employed during their postsecondary education, especially in a job related to their field of study.

17 As of 1 June 2014, study-permit holders were automatically authorised to work off campus for up to 20 h per week during the academic session and full time during scheduled breaks, without a separate work permit.

18 Details can be found at https://www.canada.ca/en/employment-social-development/services/funding/canada-summer-jobs.html.