Abstract Canada has a large foreign-born population with an increasingly diverse ethnic profile. The 1986 Employment Equity Act designated "visible minorities," Aboriginal peoples, women, and disabled persons as facing labor market disadvantages. This review of a growing body of research on ethnic earning differentials shows that the sizeable earnings shortfall of Aboriginal peoples could be "explained" by their lesser endowments of work-related characteristics. The high variance in discrimination estimates among men can be traced to the treatment of immigration effects, aggregation of diverse ethnic groups, and the choice of the non-discriminatory earnings norm.
Keywords: Canada, visible minorities, ethnicity, earnings discrimination
Immigration and Immigration Policy 
Canada is characterized by an exceptionally large (17 percent) immigrant population with an increasingly diverse ethnic/cultural profile.  Canada's immigration patterns were determined by a number of factors: colonization by the French and British; the railroad age; the Great Depression; industrialization; and economic expansion. During the eighteenth and nineteenth centuries, nearly all immigrants came from Britain and France (the so called "founding peoples"). Until the twentieth century, more people emigrated from Canada (to the United States) than immigrated. However, the completion of the national railways attracted an unprecedented number of immigrants from northern, central and Eastern Europe to populate the newly opened Prairies.
During the settling of the Prairies, immigration peaked at 400,000 in 1913. However, the onset of the Great Depression, closed the immigration door until the end of World War II. By 1931, Canada was on its way to becoming a multi-ethnic nation in which there was substantial representation of almost every European ethnic group, still dominated by British (52 percent) and French (28 percent); the distribution remained constant until 1941.
After World War II, immigration restrictions were relaxed in order to accommodate increased labor demands of a rapidly expanding economy. However, the 1953 Immigration Act continued to allow the government to bar entry for reasons such as ethnicity, nationality, and "peculiar customs, habits, modes of life or methods of property". British, (white) Americans and, to a lesser degree, French immigrants were preferred. By the end of the 1950s, Europe accounted for 84 percent of immigrants.
The year 1962 witnessed a landmark change in immigration policy in response to pressing labor market needs, demographic goals, well as growing opposition to restrictions based on ethnic origin and race. Legislative changes officially lifted ethnic, racial or religious barriers to immigrants who qualified by reason of "education, training, skills or other special qualifications". However, the new regulations still allowed European immigrants to sponsor a broader range of relatives than non-Europeans. The 1967 Immigration Act formalized the 1962 regulations and established a "point system" for selecting immigrants, with the main purpose of aligning immigrant flows with the perceived needs of the economy. The Act removed all traces of ethnic, national and racial preferences; it also constrained the discretionary power of overseas immigration officers. The new immigration regulations had an immediate and profound effect on immigration streams in the late 1960s and 1970s: the share coming from Europe decreased to about 50 percent, while the proportion from Asia, Africa, the Middle East, and the Caribbean/Latin America increased sharply to 43 percent from 16 percent in the late 1950s and early 1960s.
The 1978 Immigration Act introduced several new features. Greater weight was given to considerations that would foster economic growth. The minimum requirement was increased to 70 points (from the earlier 50); more emphasis was also given to occupational skills and technical training and less weight to general education. …