Wealth Accumulation of Canadian and Foreign‐born Households in Canada

This study focuses on the role of foreign‐born households in Canada's asset market. An empirical analysis of wealth accumulation is conducted for a large sample of Canadian households circa 1977–84. This study period reflects a change in Canada's immigration policy which resulted in immigration Rows switching from Europe to Asia. A life‐cycle framework is used to examine wealth accumulation behaviour of the foreign‐born vis‐à‐vis Canadian‐born households. The empirical results confirm the existence of an inverted ‘U’‐shaped wealth‐age profile for both Canadian and immigrant households. However, the 1977 results show that the rate of wealth accumulation is higher for the immigrant household than the Canadian‐born household in pre‐retirement years, while the 1984 results reveal the opposite. After retirement, the rate of wealth dissipation is slower for Canadians than for foreign‐born households. Only the 1984 results indicate that public social security wealth displaces household savings for both the Canadian‐born and the foreign‐born by a small amount. Finally, an immigrant household exhibits a stronger transfer motive within a family than a Canadian‐born household regardless of year tested.