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Asymmetric Information and the Discount on Foreign-Acquired Degrees in Canada

Asymmetric Information and the Discount on Foreign-Acquired Degrees in Canada AbstractA growing wage gap between immigrant and native-born workers is well documented and is a fundamental policy issue in Canada. It is quite possible that wage differences, commonly attributed to the lower quality of foreign credentials or the deficiency in the accreditation of these credentials, merely reflect lower wage offers that immigrant workers receive due to risk aversion among local firms facing an elevated degree of asymmetric information. Using the 2006 and 2011 population censuses, this paper empirically investigates the effects of wage bargaining in labor markets on the wage gap between foreign- and Canadian-educated workers. Our results imply that a significant part of the wage gap between foreign-educated and Canadian-educated immigrant (and native-born) workers is not driven by the employers’ risk aversion but by differences in human capital endowments and occupational matching quality. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png IZA Journal of Development and Migration de Gruyter

Asymmetric Information and the Discount on Foreign-Acquired Degrees in Canada

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Publisher
de Gruyter
Copyright
© 2019 Yigit Aydede and Atul Dar, published by Sciendo
ISSN
2520-1786
DOI
10.2478/izajodm-2019-0002
Publisher site
See Article on Publisher Site

Abstract

AbstractA growing wage gap between immigrant and native-born workers is well documented and is a fundamental policy issue in Canada. It is quite possible that wage differences, commonly attributed to the lower quality of foreign credentials or the deficiency in the accreditation of these credentials, merely reflect lower wage offers that immigrant workers receive due to risk aversion among local firms facing an elevated degree of asymmetric information. Using the 2006 and 2011 population censuses, this paper empirically investigates the effects of wage bargaining in labor markets on the wage gap between foreign- and Canadian-educated workers. Our results imply that a significant part of the wage gap between foreign-educated and Canadian-educated immigrant (and native-born) workers is not driven by the employers’ risk aversion but by differences in human capital endowments and occupational matching quality.

Journal

IZA Journal of Development and Migrationde Gruyter

Published: Jul 17, 2019

References