Labor Market Segments
and Earnings Disparities
The average immigrant enters the earnings distribution in its bottom half. This is true for most immigrant groups in all three countries. Hence, the overall shape of the earnings distribution in that bottom half can have a major effect on actual amounts of money that individual immigrants earn. Wider and more polarized earnings distributions such as exist in the United States mean simply that the best-paid jobs there are actually paid more in relative terms than the best-paid jobs in Canada or Australia. By the same token, the worst-paid jobs in the United States are paid less than the worst-paid jobs in Canada or Australia. Given the low level at which most immigrants enter the distribution, greater U.S. earnings inequalities are bound to affect them on the negative side, at least initially. These effects of earnings distributions actually compound the effect of the greater immigrant skills gap in the United States. In addition, immigrants are concentrated in specific labor market locations which may place them at further risk of exploitation and disadvantage.
This chapter explores these issues empirically and quantitatively, attempting to estimate the effect of labor markets on immigrant entry levels in each country. The chapter proceeds as follows. First, we describe recent trends in labor market institutions in each country, showing that the most important differences probably have to do with earnings distributions and the power of organized labor in affecting them. Second, based on differences in earnings distributions, we attempt to provide rough estimates of effects on immigrant entry-level status for specific groups. Although different labor market theories imply different processes, it is argued that the assumptions necessary for this estimate are reasonable from all theoretical standpoints. Impacts on immigrants also can be projected over time, to take account of the country-specific way that earnings distributions may be changing over time.