Public and Private Sector Earnings of Immigrants and the Canadian-born: Evidence from the Labour Force Survey

That immigrants in Canada on average earn lower wages than observationally equivalent Canadian-born individuals has been the subject of much research in recent years. The role of the public sector in this immigrant wage gap has been studied much less. We seek to add to the sparse literature on this topic. Using Statistics Canada’s monthly Labour Force Survey master files from January 2006 to December 2018, we evaluate the wage differences between immigrants and comparable Canadian-born workers both within the private and the public sectors, as well as the public sector wage premium within the immigrant and Canadian-born populations. Using both Ordinary Least Squares and Oaxaca-Blinder decomposition techniques, we find that the immigrant wage gap tends to be negative and is largest in the private sector. The public sector premium relative to the private sector is also larger for immigrants that for the Canadian-born when we compare wage differences within the two groups. Combined, these results suggest that the public sector may play an important role in narrowing the overall immigrant wage gap.