The Differential Impact of COVID-19 on Labour Market Outcomes of Immigrants in Canada

Another study on the differential impact of COVID on immigrants, recent and long-term, highlighting, as expected recent immigrants were most affected, followed by established immigrants. Conclusion below:

Our results indicate that the pandemic has had an obvious large adverse effect on a wide range of labour market outcomes for all workers in Canada. The adverse effects, however, have been particularly large for recent immigrants relative to the domestic-born as they experienced a disproportionately lower probability of being employed and of holding a full-time job, a higher probability of having only temporary work and substantially more unpaid overtime. When these disproportionate adverse effects for recent immigrants are added to the overall adverse effects for all workers, the magnitudes of the total adverse effects of the pandemic for immigrants are extremely large. The same applies to established immigrants. In essence, the overall workforce experienced substantial adverse effects of the pandemic, but those adverse effects were disproportionately large for recent and established immigrants.

Most of the effects of the pandemic were concentrated in the initial first wave as the shutdowns and social distancing forced consumers, employers, and workers to adjust immediately; however, recent immigrants continued to experience disproportionately negative labour market outcomes in later waves. Heterogeneous effects were also documented with greater adverse effects for recent immigrants relative to domestic-born who are women, who have child responsibilities and who are the less educated. Of particular note, recent immigrants working in occupations with greater exposure to COVID-risk reported increased employment and substantially more unpaid overtime than domestic-born during the pandemic.

The pandemic generally had different effects across the quantiles of the distribution of the outcomes for recent immigrants, relative to the domestic-born, with the differential adverse effects tending to be concentrated at the bottom of the outcome distributions. Although recent immigrants gain a small positive wage premium relative to the domestic-born at the bottom of the wage distribution, the benefits of this may be illusory if it reflects wage bonuses for COVID risks or low-wage workers more likely not to be employed. Recent immigrants at the bottom of the outcome distributions reported fewer weekly hours worked, fewer hours worked relative to scheduled hours, and more unpaid overtime than domestic-born workers. The hours differences could exacerbate inequality in hours worked between immigrants and the domestic-born for those working in precarious arrangement (i.e., few hours, large scheduling uncertainty, and more unpaid overtime hours).

While hazardous to suggest policy implications from such an unanticipated and still unfolding event as the pandemic, a number of policy considerations merit attention. The disproportionate adverse effect of the pandemic on more vulnerable disadvantaged recent immigrants (e.g., women, less educated, low-wage, those with childcare responsibilities and high exposure to COVID risk) should be recognized, and targeted rather than applying “one-size fits all” initiatives.⁸ Koebel et al. (2021), for example, argue that a basic income guarantee targeted toward low-income workers, in combination with Canada’s pre-existing Employment Insurance program, would have produced better employment and public health outcomes than the less targeted combination of the Canada Emergency Response Benefit and Canada Emergency Wage Subsidy that were used. Qian and Fuller (2020) emphasise the importance of enhanced child-care arrangements given the disproportionate adverse effect on women with child-care responsibilities.

Immigrants tend to face barriers in having their foreign credentials recognized and in acquiring occupational licenses and the associated wage gains that are disproportionately large for them (Gomez et al. 2015). Removing such barriers and relaxing occupational licensing restrictions can be a targeted initiative for immigrants (Gomez et al. 2015). The fact that the adverse effects tended to occur early in the pandemic highlights the importance of early intervention and having a playbook in place to facilitate an early response. Elements of a playbook for labour policy include: having a first-responder labour policy team in place; determining early the novel versus permanent nature of the shock; acting quickly but flexibly to make mid-course corrections if necessary; keeping people in their existing jobs to preserve firm-specific human capital; balancing active labour market policy versus passive income support; co-ordinating with other departments and jurisdictions; anticipating conflicts; and planning for the recovery with an exit strategy (Gunderson 2020). Lessons from this pandemic as well as previous shocks can be invaluable for preparing for future shocks.

Source: The Differential Impact of COVID-19 on Labour Market Outcomes of Immigrants in Canada