The Main Culprit behind Immigrant Wage Gaps in Canada : Lower Returns to Foreign Schooling or Work Experience?

Using the Survey of Labour and Income Dynamics (SLID) I examine how immigrants’ foreign human capital is rewarded in the labour market. I exploit the enhanced details on education attainment, provided in the SLID, to decompose human capital variables into foreign and Canadian measures that are more precise than those used in related Census-based studies. I find that measurement error associated with using imprecise measures exaggerate the portability of foreign schooling and the degree of immigrant wage assimilation. However, the virtually zero returns to foreign work experience, commonly found in the literature, cannot be attributed to measurement error and is mainly responsible for estimated wage gaps in the standard human-capital-adjusted earnings function