Academic Literature

Immigrants during Recessions in Canada – Entering the labour market during a recession may also result in “scarring” effects

The labour market outcomes of recently arrived immigrants are often more negatively affected during recessions than those of the Canadian born. Entering the labour market during a recession may also result in “scarring” effects for both immigrants and Canadian-born workers. But the severity and characteristics of recessions vary significantly and may affect the outcomes of immigrants differently. This paper compares immigrants’ outcomes during the past three recessions. The early-1990s recession was more severe and lasted longer than the 2008/2009 recession. The 1990s recession had a large differential impact on the employment rates and earnings of recent immigrants, relative to the Canadian born, while the milder 2008/2009 recession had relatively little differential effect. Both recessions hit the goods-producing sector hardest, and disproportionately affected men, younger workers, and workers with lower levels of education and low seniority. During the COVID-19 downturn, accommodation and food services and retail trade were hit particularly hard; low-wage workers bore the brunt of the recessionary effect, along with less educated workers and young women. Recently immigrated women experienced a greater increase in unemployment than Canadian-born women during the COVID-19 recession, caused in part by their over-representation in some of these groups. There was a small difference between recently immigrated and Canadian-born men in employment and unemployment rates during the COVID-19 recession. There was evidence consistent with possible “scarring” effects for the longer-term earnings of immigrants entering during the early 1990s recession. Evidence from the 2008/2009 recession did not support such a conclusion. It is too early to assess the longer-term effects of the COVID-19 downturn.

Source: Immigrant labour market outcomes during recessions: Comparing the early 1990s, late 2000s and COVID-19 recessions


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