Overeducated Immigrants in the Canadian labour market: evidence from the workplace and employee survey

This paper addresses the overeducation of recent immigrants in the Canadian labour market. Data from the 1999 Workplace and Employee Survey are used to explore the determinants and earnings consequences of overeducation. Although a well-developed body of literature examines the earnings consequences of overeducation, this paper presents the first Canadian estimates of returns to years of schooling that are contingent upon perceived job requirements. Compared with Canadian-born workers, recent immigrants are found to have a relatively high incidence of overeducation and to earn relatively low returns for surplus schooling. These are shown to be major contributors to the earnings gap between recent immigrants and workers born in Canada.