Race and Earnings

Economists tend to be remarkably circumspect about racial discrimination in employment, and Statistics Canada is similarly loath to attribute differences in employment and earnings to racial status in other than the most nuanced way. Yet the evidence increasingly shows that racial discrimination is a matter of empirical fact in Canada, and not just a matter of perception on the part of racialized groups.

The D word (discrimination) is not mentioned in a new Statistics Canada study on the earnings of second generation immigrants. (Boris Palameta. “Economic Integration of Immigrants’ Children.” Perspectives on Labour and Income. October, 2007. http://www.statcan.ca/Daily/English/071029/d071029a.htm ) Yet the study is a gold standard test of racial differences and discrimination, answering the question: “do the earnings of second generation younger adult racialized immigrants born and educated in Canada lag those of native born Canadians.”


Often, earnings gaps by race are explained away by reference to the fact that most workers of colour are recent immigrants whose credentuaials, work experience and skills may not be recognized in Canada. For some this indicates discrimination, but others can and do argue that foreign skills and experience are not fully comparable and explain wage and employment differences. But evidence of a racial gap between young adult Canadians born and educated in Canada cannot be explained away so easily.

Usefully, the study differenmtiates between second generation immigrants (aged 17 to 29) who belong to visible minority groups, and those who do not. The study finds that second generation immigrants usually do better than other Canadians, which is not surprising sonce the educational attainment of both second generation immigrants and their parents is much higher than among longer-settled Canadians.

However, about one in three (29.5%) of second generation young adult immigrants beliong to visible minoroity groups.

As reported in the media, the study finds that there is a huge 38% earnings gap between these racialized second generation immigrants and other young adult men, though it also finds that the wage gap does not exist among young adult women.

What the media left out of the story is that the gap among men based on racial status exists after controlling for a very large range of characteristics. This includes not just education, martital status, the prescence of children and geography of residence and work, but also key job characteristics such as full time status, working for a large firm, and union/non union status. In short, the 38% male earnings gap by racial status exists among, say, highly educated young men and women working full time for large firms in Toronto.

When we think about racial discrimination, much of what we think about is exclusion from good jobs, and not just pay discrimination once a job has been obtained. The fact that there is such a large pay gap among young men by racial status is strong evidence of pay discrimination, which almost certainly comes on top of employment discrimination.

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