Low-income and Immigration: An Overview and Future Directions for Research

Copies of the full report are available upon request to Research-Recherche@cic.gc.ca.

Executive summary

Recent trends indicate that the gap between the low-income rates for immigrants and those born in Canada has increased substantially since 1980. Rising low-income rates among more recent immigrants relative to both the Canadian-born and immigrants who have been in Canada longer are cause for concern because low-income potentially impacts the ability of immigrant individuals and families to participate economically, socially, culturally, and with dignity in their communities. While the latest research results point to improvements in immigrant economic outcomes relative to the Canadian-born, there remain immigrants who have not seen an increase in relative economic performance, and who live in chronic low-income. This is potentially one of the most serious social and labour market challenges that Canada is facing. The objective of this report is to provide an overview of the low-income situation of immigrants in Canada with the goal of highlighting aspects of this issue in need of additional research. This report is organized into four parts. Part one considers the policy importance of the issue of low-income and immigration. Part two provides a description of low-income measures and touches upon differences to reflect on when using these indicators to evaluate immigrant economic outcomes. This is followed in part three by an examination, based on a review of the research literature, of the factors that contribute to the low-income situations of immigrants in Canada. Finally, part four provides a brief summary, along with research and data considerations for the investigation of low-income and immigration going forward.

There are a number of low-income lines used to inform policy development in the area of immigrant economic integration. Low-income measures such as Statistics Canada’s Low-Income Cut Off (LICO) and Low-Income Measure (LIM), and Human Resources and Skills Development Canada’s Market Basket Measure (MBM) can be used to identify the low-income population, while measures of chronic low-income and low-income intensity are often used in studying trends in the depth and duration of low-income spells among immigrants. It is meaningful to understand if a situation of low-income is transitory or persistent, as policy solutions may be very different. The existing low-income measures are designed to identify low-income individuals from different angles. Given the many dimensions of low-income, it may not be possible to find one measure that provides a complete picture; rather, it is argued in several studies reviewed that it is most useful to develop or adopt multiple measures of low-income. Although the use of LICO has been prevalent to date in studies looking at immigrants and low-income, the growing obsoleteness of this measure (with increasing number of years from a 1992 base year), along with recent data developments imply a likelihood of a move towards more prevalent use of LIM-based measures (which are derived from the distribution of incomes in the underlying population in each year) going forward.

Low-income is widely accepted as an indicator of access to economic resources among members of society and is therefore often used as a key indicator of immigrant integration and well-being. This study reviews the factors contributing to the earnings outcomes among recent immigrants (low-income among immigrants has closely tracked earnings trends, since earnings are the most significant component of family income, which is used to calculate low-income rates), focusing on the relationship between the characteristics of immigrants, or the socio-economic attributes that immigrants bring with them (including immigration category, year of landing and years in Canada, age, education, gender, source country, family type, province of residence, occupation, etc.), and the opportunities and barriers presented by the host society, be they economic, social, or institutional. Only through comparisons can factors be brought to light that explain why some groups end up more or less affected by low-income. Overall, the causes of low-income amongst immigrants are multifarious. For working age immigrants, for example, a shift in their characteristics and the cyclical nature of the economy may lead to additional barriers to the labour market, while for senior immigrants, their family size, family type, and motivations for immigration may generate different income levels.

In reviewing the recent literature on the low-income situation of immigrants in Canada and in examining different measures of low-income, this report concludes with the identification of potential new research possibilities. Specifically, a gap in research is revealed on the low-income situation of immigrants post-2006, the time of the last Canadian Census of population. There are two key reasons why the post-2006 time period is of particular policy importance with respect to understanding the low-income situation of immigrants in Canada today. First, many immigration policy changes have taken place since 2002, starting with the implementation of the Immigration and Refugee Protection Act (IRPA), and it is important to understand how these changes have influenced the income situation of recent immigrants. Second, labour market conditions throughout Canada (and many areas of the world) since 2006 have changed considerably (for example, the Canadian economy underwent a recent recession, from October 2008 to October 2009). In light of the recent changes in immigration policies and both domestic and global economic downturn and recovery, research is needed that looks at the low-income situation of recent immigrants in this new landscape.

To this end, data are needed that will contribute to the current understanding of the low-income situation of immigrants in all admission categories, including economic immigrants, and particularly among family class immigrants and refugees. The past has seen a fairly steady use of several Statistics Canada’s surveys to examine the low-income situation of immigrants and other Canadians, mainly the Census, the Survey of Labour and Income Dynamics (SLID), and to a lesser extent, the Longitudinal Administrative Database (LAD)-Longitudinal Immigration Database (IMDB) (LAD-IMDB Database). Recent developments with regards to these traditionally used surveys have important implications (reviewed in this report) for the continued study of immigrants in low-income going forward. A recently Redesigned IMDB that now includes family formation (among other additions) is likely to become the key information source to examine the labour market transitions of immigrants, including into and out of low-income situations. In light of policy focused on improving the economic outcomes of immigrants, research and data development in the areas of low-income – incidence and causes – is a priority.

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