Immigrants' Economic Status in Toronto:
Rethinking Settlement and Integration Strategies

© Lucia Lo, Valerie Preston, Shuguang Wang, Katherine Reil, Edward Harvey & Bobby Siu
This paper is presented for discussion and comments.  A revised version of this paper will appear as a chapter in the volume Integrating Diversity, to be published by CERIS-Toronto in 2001.  The authors acknowledge support from the Major Projects Initiative of CERIS-Toronto.

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Participation in ethnic economies may be one of the keys to the economic success that is proving elusive for recent immigrants. Using the 1991 census data, this study profiles the economic status of ethnocultural groups in Toronto through an examination of unemployment rates, average employment income, and incidence of low income. These three indicators provide an indication of (un)employment among different ethnocultural groups; income levels and the likelihood of different ethnocultural groups experiencing poverty in Toronto.

In order to see the big picture@ in Toronto, 58 ethnocultural groups have been categorized into two key groups: visible minority groups and European groups. AVisible minority@ groups consist of Black/African Black, Latin American (visible minority only), South Asian, Southeast Asian, West Asian/Arab, Chinese, Korean, Japanese, and Filipino. AEuropean groups@ include British, French, British and French, Western European, Northern European, Eastern European, Southern European, and Latin American (not-visible minority only).

To understand how different periods of immigration affect the economic status of immigrants, we divided the data into five periods of immigration: those who immigrated before 1961, 1961-70, 1971-80, 1981-87 and 1988-91. The last two periods are shorter than the other three periods for two primary reasons. First, the literature has indicated that the initial few years of residence in Canada are the most difficult for immigrants. Second, these periods correspond to a large numbers of immigrants settling in the Toronto area. In order to gain an indepth understanding of the immigrant socioeconomic experience the most recent immigration period (1981-1991) was subdivided into two, five-year cohorts. In addition, this study also examines gender as a factor in determining the socioeconomic status of immigrant ethnocultural groups.

Generally women from non-English-speaking countries are socioeconomically disadvantaged (Basavarajappa and Verma, 1990; Boyd, 1984, 1990). In their reviews of immigrant women's employment in Canada, Estable (1986) and Seward and McDade (1988) confirm that racial stratification exists to the disadvantage of visible minorities and that visible minority women are employed in occupations not commensurate with their experience and skill level.

Nakhaie (1995, 1997, 1998), in three separate studies of ethnocultural groups in Canada, found that persons of British origins continued to be overrepresented in higher socioeconomic status positions. Hou and Balakrishnan (1996), using 1991 Census of Canada data, found that being an immigrant has a negative impact on the income level of all visible minority ethnocultural groups, with the most pronounced effects among recent immigrants.

Socioeconomic characteristics (e.g. male unemployment, government transfers, female-headed families, and lack of a high school education) combine to effect a higher coefficient of poverty status than do ethnocultural variables (Ley and Smith, 1997). Recency of immigration again appears to be the defining characteristic for poverty.

It appears that structural factors such as: social stratification, labour market segmentation, discrimination against visible minorities and economic cycles determine the macro level general distribution of immigrants groups in Canada and account for some intergroup differences. However, it is the micro level factors, such as demographic characteristics (e.g., age, gender, educational attainment, language skills, and family status) that account for intragroup differences.

The analysis of Toronto-based data will determine if the findings from the literature can be generalized to Toronto; examine the economic status of different ethnocultural groups in Toronto; determine the impact of gender on these patterns; and, finally, determine whether immigrants fare better in Toronto than in other part of the country.

Throughout the analysis, the reference point for comparison is the Toronto average for each of the socioeconomic dimensions. Statistical findings and patterns from the quantitative data analysis are followed by a discussion on the policy implications of these findings.

There is a linear progression of unemployment rates among immigrants: the most recent immigrant cohort (both sexes) of 1988-91 has the highest unemployment rate (17.7 percent), followed by its previous cohorts: 1981-87 (12.2 percent), 1971-80 (9.0 percent), 1961-70 (6.8 percent), and before 1961 (6.3 percent). This linear progression is also found among male immigrants (from 5.9 percent to 17.2 percent) and among female immigrants (from 6.9 percent to 18.4 percent). Those who immigrated before 1971 fared better than non-immigrants did (7.1 percent) and the average Toronto population (8.5 percent). This indicates that more recent immigrants have the highest unemployment rates.

In addition, some ethnocultural immigrants have persistently high unemployment rates compared with the Toronto average. The ethnocultural groups with persistently higher average unemployment rates are: Latin American (visible minority), Black, South Asian, Southeast Asian, Eastern European, and Southern European. In contrast, Korean, British, and Western European immigrants have persistently lower than average unemployment rates. When these data are broken down by gender, West Asian and Latin American (non-visible minority) women are added to the list of ethnocultural groups with persistently higher unemployment rates. In contrast, Southeast Asian men are less persistent in their higher unemployment rates (as compared with the data of both sexes).

The data analysis of visible and European groups, indicate more recent European immigrants fare better than recent visible minority immigrants. For the most recent cohort (1988-91) all other European immigrants fared better than the Toronto average for all immigrants, with the exception of Eastern European immigrants. However, five of the nine visible minority groups fared worse. When data are broken down by gender for the most recent cohort of immigrants, both European and visible minority men fared worse than their female counterparts.

In addition, visible minority immigrants experienced higher unemployment rates than their European counterparts. Visible minorities' lowest unemployment rates are always higher than the lowest for European immigrants with the exception of the Abefore 1961@ cohort. In a comparison of high female unemployment rates, the rates of visible minority members with the highest unemployment rates tend to be higher than their European counterparts. However, the reverse is true for men: the rates for European men with the highest unemployment rates tend to be higher than those rates of visible minority men. As for the lowest rates, women of visible minority backgrounds from the most recent cohort (1988-91) have higher rates than their male counterparts.

An examination of the ranges in unemployment rates reveals that visible minority group immigrants tend to have larger ranges in unemployment rates compared with European group counterparts. In three of the five periods of immigration, the range between the highest and lowest unemployment rates among visible minority groups is larger than the range found among European immigrants. For example, in the 1981-87 cohort, a range of 16.6 percentage points is found among visible minority groups. For the same immigrant cohort, the range is 14 percentage points among European groups. However, in 1971-80 and 1988-91 the ranges for European groups are larger than those of visible minority groups. When data are broken down by gender, it is noted that the ranges for European women and men are generally larger than the ranges found for visible minority and men.

These patterns suggest that period of immigration, in addition to visible minority or European ethnocultural group status, is a key factor in understanding unemployment patterns among immigrants.

Recency of immigration was found to be a noteworthy variable in understanding income patterns of immigrants. More recent immigrants have lower average employment incomes. While immigrants who came to Toronto before 1961 earned $35,990 on average, those who arrived from 1961 to 1970 earned $33,285; 1971 to 1980, $27,272; 1981 to 1987, $23,002, and 1988 to 1991, $18,077. This linear progression applies to male immigrants (from Abefore 1961@ onwards) and, to a great extent, female immigrants (only from 1961 onwards).

The data indicate earlier immigrants earn more than both non-immigrants and the Toronto average. The employment incomes of immigrants who came before 1981 are higher than employment incomes of both non-immigrants ($23,879) and the general population ($24,329). When data are broken down by gender, the average income of female immigrants ($21,433) does not differ substantially from the average income of non-immigrant women ($22,901) in the Toronto area. However, when this immigrant average income is broken down by period of immigration, only women who immigrated during two of the five immigration periods, Abefore 1961@ and A1961-70,@ earned more than the average income for Toronto women. A similar pattern is noted for men. The average income of immigrant males ($34,398) does not differ substantially from the non-immigrant average income for men ($36,775) in the Toronto area. However, when the data are broken down by period of immigration, only men who immigrated during the same two periods of immigration earned more than the average income for Toronto men. This finding highlights recency of arrival or length of residence as an important variable in the analysis of economic status and supports the observation that gender has a complex effect on income. The findings suggest the need for additional research into the nature of the relationship among gender, period of immigration, and ethnocultural groups.

The data also indicate persistent patterns of low income among different ethnocultural groups. Most visible minority groups have persistently low employment incomes. Black, Latin American (visible minority), South East Asian, and Korean are four subgroups that have persistently lower employment incomes than the average immigrants in Toronto for all five cohorts. The only European subgroup with persistently low employment income levels is the Latin American (not-visible minority) group. In fact, there are more visible minority groups than European groups represented in each of the five immigration cohorts. When data are broken down by gender, women of Southern European backgrounds have persistently lower employment incomes than the total Southern European group (two sexes combined) across all five periods. However, Filipino men earn less than Filipino women across all five periods of immigration. Alternatively, most recent European immigrants Afared better@ than recent visible minority immigrants. Seven of the nine visible minority subgroups in the 1988-91 cohort have lower employment incomes than the average. Only two of the eight European sub-groups have lower employment incomes in the same cohort. Similar patterns apply to both recent immigrant men and women. This suggests that there are systemic patterns of income discrimination for visible minorities or patterns of systemic underemployment.

While visible minority immigrants who immigrated between 1961 and 1987 have lower employment incomes than their European counterparts, the range of employment incomes is also noteworthy. During this period, the visible minority sub-group with the highest employment income had a lower income than that of the European sub-group with the highest employment income. Similarly, the visible minority subgroup with lowest employment income had a lower income than that of the European subgroup with the lowest employment income. In the Abefore 1961@ and A1988-91@ period of immigration, the patterns are reversed. An examination of average incomes at both ends of the continuum (highest and lowest) reveals the following. When data are broken down by gender, European women with the highest incomes, had incomes lower than their visible minority counterparts. Similarly, European women with the lowest incomes, had incomes lower than their visible minority counterparts. There are minor exceptions. The incomes of male visible minority groups with the highest incomes tend to be lower than their European counterparts for three of the five periods; and their lowest incomes are also lower than those of their European groups for four of the five periods.

Visible minority groups have wider income ranges than European groups in three of the five immigration cohorts. But the pattern of progression is not clear for both visible minority and European groups. The income range for visible minority groups is largest ($25,816) in 1988-91, and for European groups the largest income range ($37,366) occurs in the Abefore 1961@ cohort. For women, visible minority groups have wider ranges among themselves in incomes than European groups only in the 1961-70 period. In other periods, European groups have wider ranges than visible minority groups in four of the five periods. As for men, the same pattern emerged where European men did worse than visible minority in four of the five periods. Larger income ranges are found for more recent visible minority immigrants compared with European immigrants in similar immigration cohorts. When the data are broken down by gender, its appears that gender is more important than their ethnocultural group for recent female immigrants. The pattern is reversed for men: the most recent immigrant (1988-91) visible minority group has the largest income range ($38,622).

In comparison with the Toronto CMA average income, men and women from both visible minority and European groups earn less than the average non-immigrant income until they have resided in Toronto (or Canada) for approximately 20 years. This indicates the importance of length of residence as a key factor in the attainment of economic parity. In addition, the data indicate the persistence of lower income patterns among visible minorities.

With the exception of those who immigrated before 1961, more recent immigrants have a greater chance of experiencing poverty. In the 1961-70 immigration cohort, 10.05 percent of immigrants were below the poverty line. This number steadily increases over time. In the 1981-1987 cohort, the LICO level increased to 19.73 percent, and to 36.56 percent for the 1988-91 cohort. This pattern of linear progression holds true also for men and women beginning with the 1961-70 immigration period. Earlier immigrants have lower levels of poverty than the Toronto average. Those who immigrated before 1981 Afared better@ than the Toronto average for the entire population (13.96 percent). In contrast, those who immigrated after 1980 fared worse. The levels of immigrant male poverty are higher than the Toronto average only for those who immigrated after 1981. Levels of female immigrant poverty exceed the Toronto average for women who immigrated after 1971. This implies that immigrant women experience longer periods of poverty. In addition, recency of immigration is a key factor in the assessment of poverty among both visible minority and European groups.

Similarly, immigrants have persistently high levels of poverty compared with non-immigrants. It is noteworthy that levels of poverty for both men and women are persistently higher than their non-immigrant counterparts across all five periods of immigration. It is also evident that the poverty level for non-immigrant men in Toronto is the lowest average noted in this study (8.38 percent).

In comparing visible minority and European immigrants, more visible minority groups experience more periods of high poverty than the European groups. Black, Latin American (visible minority and not-visible minority), Korean, Southeast Asian and West Asian/Arab, and Eastern European groups experience persistently high levels of poverty. It is clear that there are more visible minority groups than European groups that have high poverty levels. Therefore being a visible minority and an immigrant pose a double disadvantage. When data are broken down by gender, Latin American (non-visible minority) women have the highest levels of poverty. Yet the Latin American male counterpart had lower levels of poverty compared with the average for male immigrants. However, the situation is different for visible minority males. Latin American men (visible minority), Chinese men, and South European men have higher levels of poverty, and it is more persistent spanning more periods of immigration.

Toronto CMA average low income cut-off (LICO) is 13.96 percent

Non-immigrant population Toronto CMA average low income cut-off (LICO) is 9.95 percent

In an examination of the ranges of poverty, visible minority groups have higher levels of poverty compared with their European counterparts. With the exception of those who immigrated in the 1961-70 period, the percentage of the visible minority group with the highest poverty level is higher than the European group counterpart with the highest level of poverty. This suggests that, compared with European groups, more recent visible minority groups have a greater chance of being poor. When data are broken down by gender, it is noted that in four of the five immigration periods, poverty levels for female visible minority immigrants are higher than their European counterparts. The patterns for male immigrants are similar to those for female immigrants. This finding indicates male visible minority immigrants experience more extensive poverty than European men. The range in poverty levels increased among visible minority groups from the 1961-70 cohort to the 1981-87 immigrant cohort. For the European immigrants, the pattern is reversed. With the exception of the Abefore 1961@ cohort, poverty levels for visible minority groups have increased in a linear fashion, from 12.10 percent in the 1961-70 cohort to 22.26 percent in the 1988-91 cohort. However, for European groups, the pattern is reversed. Ranges of poverty levels increase with recency of immigration for both men and women. For example, levels of poverty range from 15.14 percent (for the 1961-70 cohort) to 22.47 percent (for the 1988-91 cohort) for women and 13.38 percent (for the 1961-70 cohort) to 31.69 percent (for 1988-91 cohort) for men. When data are broken down by gender, the ranges in poverty levels for visible minority men and women are higher than those for European men and women for three out of the five periods.

Do immigrants fare Abetter@ in Toronto? It is within a context of existing regional economic disparity that immigrants enter Canada. Additionally, it is understood that national averages marginalize differences. However, given that Toronto receives the largest number of immigrants anywhere in Canada, it is valuable to explore the Canadian immigrant experience as a comparator.

The following analysis compares populations of men and women combined and uses the national average and Toronto CMA average as comparators. The analyses show that: 1) in comparison with Canada, Toronto's immigrants have higher incomes, lower unemployment rates, and a lower incidence of poverty; 2) the differences (internal ranges) within each of the visible minority and European groups among all three indicators in Toronto are generally higher than the national ranges (ranges); and 3) there are some variations in the persistency of higher unemployment, lower incomes, and incidence of poverty across the five periods among certain ethnocultural groups.

Immigrants in Toronto generally have lower rates of unemployment for all five periods of immigration assessed in this study when compared with immigrants throughout Canada. The ranges in the unemployment rates are larger for European groups and lower for Visible Minority groups in Toronto for the A1981-1987@ and A1988-1991@ immigrants cohorts. A greater number of European groups (including Western Europeans, French, and British/French) experience unemployment rates higher than the national average throughout Canada than in Toronto. Generally, the same pattern of visible minority ethnocultural groups experiencing higher than average unemployment rates is found at both the national and Toronto level of analysis for the five periods of immigration. West Asians however, experience higher than average unemployment rates across the five periods of immigration in Canada, compared with only the two most recent periods of immigration in Toronto.

A greater number of European groups (including, Western Europeans, French, and British/French) experience below-average incomes throughout Canada than in Toronto. However, average incomes are higher in Toronto than they are nationally. In general, the ranges in employment incomes for both visible minority and European groups in Toronto are higher than those for the two groups in Canada. Generally, the same pattern of visible minority ethnocultural groups experiencing lower than average employment incomes is found at both the national and Toronto level of analysis. Two noted exceptions are found for the Filipino and West Asian ethnocultural groups. At the national level, these two groups experience lower incomes for longer periods of time compared with their counterparts in Toronto.

National levels of poverty for all immigrants are higher than the poverty levels found in Toronto. The distribution of ethnocultural groups with higher than average poverty levels is almost identical with the exceptions being the presence of French and Latin American (not visible minority) groups at the national level during the earlier periods of immigration. In Toronto, both visible minority and European immigrants have larger ranges in poverty levels, for most periods of immigration in comparison with national averages.

Two major patterns emerge from this study and help to shape the big picture. First, recent immigrants have higher unemployment rates, lower employment incomes, a greater tendency to be poorer than earlier immigrants, and fare worse than non-immigrants and the average Torontonian. Second, earlier immigrants fare better than non-immigrants and the overall Toronto population on the three socioeconomic dimensions examined.

This raises an important question regarding the point at which immigrants experience the same or a better economic situation than the non-immigrants and the general population. These points vary depending on the indicators we choose. For unemployment, this point occurs in 1971; for employment incomes and poverty, the point is 1981.

Although not conclusive, the data suggest that it probably takes immigrants about 20 years to be Aon par@ with non-immigrants and the general population. In terms of employment rates, parity is achieved in a shorter timeframe approximately 10 years. Yet, poverty levels for immigrants are persistently higher than levels for non-immigrants. In other words, socioeconomic parity with non-immigrants is achieved somewhere between 10 and 20 years residence in Canada. Our Toronto study findings support similar Canada-wide studies on the importance of recency of immigration as a key factor in socioeconomic status.

In general, recent immigrants experience difficulty in employment in their chosen occupations. With the exception of immigrants from the U.S. and the U.K., Canadian employers do not view credentials earned in other countries as equivalent. The issue of recognition of foreign credentials has been examined and assessed for a number of years. The federal government is currently coordinating credential equivalency assessment and recognition processes. In addition, provincial professional licensing bodies are enacting their own assessment processes. To date, most of these processes are concerned with the assessment of trade and/or professional education, not prior learning or experience. Consequently, immigrants have their education assessed and generally do not receive credit for foreign experience. This results in longer job search times and employment in lower-level jobs (underemployment) that have lower wages. In sum, our research has underscored the complexity of the immigrant experience in Toronto.

The complexity of the immigrant experience is underscored by our analysis of immigrants' economic contributions. Using the recently released IMDB data, the analysis compares income taxes paid by Toronto's immigrants in 1995 as a major form of economic contribution, with welfare/UI benefits collected by the same immigrant population in the same tax year as forms of economic burdens. The target immigrant population comprises those who landed in the Toronto CMA between 1980 and 1995, and were 15 years of age and over in the 1995 tax year. In this analysis, a Abalance-sheet approach@ is used to document per capita income tax contributions, per capita welfare benefit receipts, per capita UI benefit receipts, tax-benefit ratios, and tax-benefit differences. In addition, we look at such indicators as percentage of immigrants reporting income tax, welfare dependency rate, and UI usage rate. Our analysis is made first for the immigrants as a whole, then for subgroups as distinguished by immigration class, level of education, country of last permanent residence, and length of residence in Canada. Moreover, reference is made to the general population of Canada (including immigrants).

Before analytical results are discussed, some limitations must be acknowledged. First, the current contents of the IMDB do not allow for a complete assessment of Immigrants' economic impact, as the data do not include all forms of contributions and benefits mentioned in this chapter's introduction. Therefore, both contributions and benefits are only narrowly defined in this study and are limited to income tax and two major types of social assistance: welfare and UI benefits. Secondly, the economic data used in this analysis are for one tax year only. This means that the special IMDB tabulation identifies the numbers of taxpayers and benefit recipients at a point in time rather than for a continuous period, and potential exists for biased conclusions. Thirdly, entrepreneurs and investors may have paid more business income tax than personal income tax. But because business income tax is not yet included in the IMDB, our analysis does not capture this contribution. As well, IMDB does not contain data on number of jobs that entrepreneurs and investors created, which is another important form of economic contributions.

In 1995, 507,300 immigrants, or 62 percent of the target immigrant population, filed tax returns; in total, they reported $1.5 billion for income taxes (both federal and provincial). In the same year, 77,800 immigrants, or 9 per cent of the target immigrant population, received $607.8 million in welfare benefits; and 66,800 immigrants, or 8 percent of the target immigrant population, received $281.6 million in UI benefits. Subtracting both types of benefits from total income tax, Toronto's immigrants made a net contribution of $578.2 million to Canada's treasury, with a T-B ratio (ratio of income tax to benefits) of 1.7:1, meaning that for every $1.7 they contributed as income tax, they collected $1 in welfare or UI benefits.

Compared with the general population of Canada, there was a lower percentage of immigrants reporting income tax (62 percent vs. 89 percent) and the immigrant tax payers on average paid lower income tax: about $2,000 (40 percent) less than the average Canadian did. As a result, the T-B ratio of 1.7:1 for immigrants is lower than the ratio of 3.9:1 for the general population of Canada. However, immigrants also exhibited a lower welfare dependency rate and a lower UI usage rate than the general population of Canada: 9 percent versus 13 percent for welfare and 8 percent versus 16 percent for UI benefits.

At one level of aggregation in the IMDB, immigrants are grouped into 13 classes. For convenience of discussion, these 13 classes are further generalized into 3 broad categories: (1) economic immigrants, (2) immigrants accepted for family reunification, and (3) those admitted on humanitarian grounds (see Table 1). Within the first category, the independent class refers to individuals admitted on the basis of skills, education, language ability, and occupational background; they include both professionals and skilled workers. Retirees are included in this category because they are admitted on the condition that they bring a required amount of capital funds to spend in Canada and support themselves. In the second category, Family Members include spouses, dependent children, parents, and grandparents of Canadian citizens or landed immigrants, all others are classified as Assisted Relatives. In the third category, Designated Class consists of immigrants admitted under special government programs, usually in response to home countries' upheaval political conditions. Deferred Removal Order Class refers to the immigrants who at one time were ordered to leave Canada but the removal order was never enforced.

In general, the percentage of economic immigrants reporting income tax is very close to the average for all immigrants (63 percent vs. 62 percent), but they have much higher ability to contribute, meaning that they are able to pay more income taxes than the other two categories of immigrants. On average, economic immigrants each paid $4,323 in 1995, about 85 percent more than what the other two categories of immigrants paid. They also have a much lower welfare dependency rate (5 percent) and a lower UI usage rate (7 percent), though the recipients on average received similar amounts as immigrants of the other two categories did. Accordingly, the T-B ratio for economic immigrants is the highest (3.5:1) and is close to the Canadian average (3.9:1). They also made the most net contributions ($445.1 million) to Canada's treasury. While they account for only 28 percent of the target immigrant population, their net contribution amounts to 77 per cent of the Immigrants' total.

Of the various classes of economic immigrants, independent immigrants are able to pay the highest income tax: $4,977 per taxpayer. Entrepreneurs and self-employed immigrants pay less tax than independent immigrants probably because they are eligible for tax exemptions for business-related expenses. Still, entrepreneurs and self-employed immigrants pay much more tax than they take from the system, as is evidenced by the high T-B ratios for them: 6.6:1 and 6.0:1, respectively. Even the retirees made a significant net contribution of $13 million in 1995, with a high T-B ratio of 9.8:1. The only surprise comes from the observation that the investor immigrants show a high UI usage rate of 13 percent, 4 percentages higher than the average for all immigrants.

It must be pointed out that the economic immigrants in the IMDB include not only principal applicants but also their spouses and dependent children. It is therefore appropriate to have their economic impacts examined separately. After separation, it is found that the principal applicants actually make much more contributions than what the statistics for both PA and their spouses/dependants combined reflect. For instance, the percentages of principal applicants reporting income tax are actually as high as 75, 94, 68, and 61 percent for independents, entrepreneurs, self-employed, and retirees, respectively (see the figures in brackets in Table 1); their per capita tax contribution is also shown to be higher: about $1,000 higher.

As a whole, immigrants accepted for family reunification also made a significant positive contribution to Canada's treasury, with a net contribution of $229.6 million in 1995. While these immigrants account for 57 percent of the target immigrant population, their net contribution accounts for 40 percent of the Immigrants' total. Notably, assisted relatives, who are subject to the point system but receive bonus points for having relatives in Canada, have a higher percentage of them paying income tax and are able to pay more dollars than do family members. At the same time, they exhibit a much lower welfare dependency rate, only 4 percent. This resulted in a much higher T-B ratio for assisted relatives (2.6:1).

Despite the high percentage of humanitarian immigrants making tax contributions (76 percent), their overall ability to contribute appears low, and both their welfare dependency rate and UI usage rate are high: 24 and 11 percent, respectively, both being higher than those for economic and family reunification immigrants. This results in a low T-B ratio of 0.7:1, at which point the benefits they received in 1995 exceeded the income tax they contributed in the same year. Apparently, this negative balance was due solely to refugees and their dependants (see Table 12).

It is normally believed that the more educated the immigrants are at the time of immigration, the more contributions they are able to make to the host economy because well-educated immigrants tend to adapt and adjust to the labour market more quickly and they require less public money for re-education and training. In fact, this belief is well reflected in the point system imbedded in the modern Canadian immigration program, and supported by the Swan et al. (1991) study. In the 1980s and the 1990s, the Canadian economy has been undergoing a transformation from the traditional industrial economy to a high-tech information economy. Since the transformation is accompanied by increasingly higher demand for a sophisticated labour force, the above belief about immigrants is more widely accepted now than ever before. While we do not doubt this belief, we intend to find out which immigrants by level of education⁴ are likely to be economic burdens to Canada's transformed economy. It should be explained that in the IMDB, level of education refers to education attainment at time of landing; any subsequent upgrading is not captured.

As Table 13 shows, except for those with 0B9 years of schooling, immigrants with different levels of education have similar percentages of reporting income tax, ranging from 65 to 70 percent. However, their ability to contribute increases, first slowly then sharply, with an increase in levels of education, as reflected by the amount of per capita income tax and T-B ratios. This is especially true of the immigrants with graduate degrees. For instance, masters each paid $8,000 in income tax in 1995 and doctorates each paid $13,229.

Both masters and doctorates also have the lowest propensity for welfare and UI benefits, though the recipients on average seem to have collected about the same dollars as other immigrants do. Immigrants with a bachelor's degree are the largest group of net contributors: they account for only 12 percent of the target immigrant population, but their net contribution of $246.1 million comprises 43 percent of the Immigrants' total. This is an immigrant group whose T-B ratio is similar to that of the general population of Canada, but they exhibit much lower propensity for welfare and UI benefits.

The only immigrants who received more benefits than the income taxes they paid are those with 0-9 years of schooling. Although the immigrants with 10-12 years of education are able to make a positive net contribution, their T-B ratio approaches to 1:1, and their net contribution is much less significant compared with their share in the target immigrant population (6 percent vs. 27 percent). It is important to point out that 80 percent of the immigrants with 0-9 years of schooling and 79 percent of those with 10-12 years of education were principal applicants and their spouses. These taxfilers were all adults at the time of landing and would have completed their education in their home countries. The findings from the IMDB should therefore represent a fairly reliable relation between their level of education (at time of landing) and their economic impact.

After 1962, Canada began to accept immigrants not only from the traditional source areas but also from developing countries with no quota for any specific country (Green 1995). Since the early 1980s, main origins have shifted from the traditional source countries of U.S., Britain, Western Europe, and Australia to the less developed countries in Asia, Latin America, and Africa. Along with the shift are increased public concerns with reduced ability of immigrants to contribute to the Canadian economy. But to what extent are these concerns valid?

Table 14 summarizes the economic impacts of immigrants by world regions of Immigrants' last permanent residence: (1) traditional source countries of U.S., Britain, Western Europe, and Oceania; (2) Eastern and Southern Europe; (3) Asia; (4) Latin America and the Caribbean; and (5) Africa.

Relatively speaking, immigrants from the traditional source countries have the lowest percentage reporting income tax (50 percent). Yet, they show the highest ability to pay income tax ($8,262 per taxpayer in 1995), and they have the lowest welfare dependency rate (2 percent) and the lowest UI usage rate (5 percent). This results in a significantly high T-B ratio of 9.7:1. Immigrants from the traditional source countries account for only 10 percent of the target immigrant population, but their net tax contribution in 1995 was 48 percent of the Immigrants' total, or $279.5 million.

Although there is a much higher percentage (69 percent) of Eastern and Southern European immigrants reporting income tax than those from Britain and Western Europe, their ability to contribute is lower. On average, the taxpayers from Eastern and Southern Europe each paid $3,303 in 1995; in the same year, they showed a higher welfare dependency rate (11 percent) and a higher UI usage rate (12 percent). However, despite their low T-B ratio of 1.4:1, their income tax still exceeded the benefits they collected, with a positive balance of $78.3 million in 1995.

Compared with immigrants from Eastern and Southern Europe, Asian immigrants as a whole show a slightly lower percentage reporting income tax (62 percent), and Asian taxpayers seem to have a lower ability to contribute as well, with each paying $2,187 in 1995. Because they also have a lower propensity for welfare and UI usage (8 percent and 7 percent, respectively), Asian immigrants contributed $188.5 million more in income tax than they collected as benefits in 1995. Nonetheless, this represents a relatively low share in the Immigrants' total net contribution compared with the share of Asian immigrants in the target immigrant population (32 percent vs. 51 percent, see Table 14). It should also be noted that immigrants from Asian countries vary considerably in their economic impacts. Those from Hong KongCthe largest single source area of the 1980s and the 1990sCexhibited the lowest propensity for welfare and UI usage (1 percent and 3 percent, respectively) and the highest T-B ratio (7:1). Immigrants from the Philippines, other Eastern and Southeast Asian countries, and India were also able to make sizeable positive net contributions as they exhibited a relatively low dependency on welfare. Those from Western and Southern Asia (excluding India), who account for 13 percent of the total target immigrant population, showed lower T-B ratios as a result of higher dependency on welfare.

The percentage of immigrants from Latin America and the Caribbean who report income tax, is similar to that of Asian immigrants (61 percent vs. 62 percent), but they show higher ability to contribute ($2,490 per taxpayer vs. $2,187). Despite this, their T-B ratio is measurably lower: 1.1:1, due mainly to a higher welfare dependency rate (13 percent) and UI usage rate (9 percent). Their net contribution in 1995 accounts for 4 percent of the Immigrants' total, lower than their 18 percent share in the target immigrant population. Like the Asian immigrants, those from Latin America and the Caribbean's vary considerably in their economic impact, with those from Central America and Jamaica showing lower T-B ratios than those from other countries in the same region.

At 20 percent, African immigrants as a whole seem to show the highest welfare dependency rate. But because the percentage of African immigrants who make income tax contributions is also high (72 percent) and the taxpayers on average pay more dollars than immigrants from Asia and Latin America, their net contribution is still positive, with a total of $10.5 million in 1995.

Understandably, it takes time for immigrants to settle down in their adopted community, adapt into the new social and economic environment, and find jobs. For some, this process may be longer than for others, depending on the similarity of their social and economic background to the characteristics of the host population. But in general, as length of residence increases, they accumulate more work experience and their English proficiency tends to increase as well; accordingly, they should achieve higher levels of economic performance and their ability to contribute to the host economy increases. Therefore, analysis of Immigrants' economic impact must also consider their length of residence in Canada.

To control possible fluctuating effects caused by minor differences between any two consecutive landing years, the 16 years 1980-1995 are grouped into three 5-year periods (with the last period covering 6 years). Analysis shows that length of residence in Canada has no obvious effects on percentages of immigrants who report income tax, welfare assistance, and UI benefits. However, it reveals that earlier immigrants are indeed able to pay more income tax but collect fewer welfare dollars. For example, the taxpayers who landed between 1980 and 1984 each paid $3,092 in 1995, and welfare recipients of the same landing period each collected $5,145. Taxpayers who landed between 1985 and 1989 each paid $2,273, and welfare recipients of the corresponding landing period each collected $8,432. Those taxpayers and welfare recipients who arrived subsequently paid $1,221 or collected $8,316 each. Accordingly, T-B ratios for the three groups are in the descending order of 3.6:1, 1.9:1, and 1.1:1, respectively. It is useful to point out that although the immigrants arriving in the second half of 1980s came to Toronto at a better economic time with good employment opportunities, that has not altered the linear descending order of T-B ratios in relation to length of residence in Canada. These patterns seem consistent with the research findings of Akbari (1995), DeSilva (1992), and Fagnan (1995), and suggest that contribution of immigrants should be expected to realize in a reasonably long period (about 10-15 years as this study indicates), instead of in short or immediate terms.

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		Updated February 09, 2004