Canada and the United States are two leading destinations for immigrants that have different selection policies and structures to ensure growth in their economy. Over the last two decades, Canada recorded a double increase in permanent migration applications relative to its national population size. The United States received half that number. In comparison to the United States, Canada has a less knowledge-intensive industrial structure and low demand for workers who have completed university education.

Additionally, employers in the United States select and sponsor immigrants who have a university education to take up employment opportunities in the country. Until the early 2010s, most immigrants in Canada who had university qualifications were directly admitted from their countries of origin through the points system. Under the arrangement, human capital characteristics, including language, work experience, age and education, are the integral basis for selecting immigrants. Supply and demand differences and new immigrants selection process can affect the relative performance of immigrants in the two countries’ labor market.

A study by Statistics Canada compared the rate of over-education among recent immigrants, those who have had an extended stay and domestic-born workers who have at least one degree. Over-education in the study represents a scenario where a job holder has at least a university first degree but holds a job that needs a high school diploma or a lesser qualification. Human capital is inefficiently used while productivity dips where workers hold jobs that require lower education qualifications. Inefficient use of human capital and underproductivity has a negative implication on an economy in the long run.

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