Immigrant Success in the Knowledge Economy: Institutional Change and the Immigrant Experience in Canada, 1970–1995

This research examines how institutional changes associated with the emergence of a “knowledge economy”—specifically the expansion of education and the changing labor market structure —shaped employment experiences of newly arriving immigrants to Canada over the period 1970–1995. Census data on successive cohorts of immigrant men and women (from microdata files for 1981, 1986, 1991, and 1996) show a progressive trend toward lower rates of labor force participation and lower levels of earnings relative to the native‐born population, both overall and for most specific origins groups. These trends are only partly attributable to business cycle fluctuations in labor demand. The present article examines the impact of selected educational and labor market changes on successive cohorts of immigrants, using intertemporal substitution methodology. The analysis finds that (1) increased native‐born education levels infringe upon the traditional immigrant education advantage, outpacing effects of increased immigrant skill selectivity; (2) increased returns to education among native‐born workers do not apply to immigrants; and (3) other institutional obstacles to immigrant success also exist. The declining relative value of immigrant education may be due to the location‐specific nature of credential validation processes. Directions for further research and policy analysis are suggested.