The Department of Economics welcomed Dr. Stephen Tino, Assistant Professor of Economics at Toronto Metropolitan University, for a research seminar on Tuesday, Nov. 3 exploring the forces behind the pay gap between immigrant and Canadian-born workers.

In his paper, Labor Market Power, Firm Productivity, and the Immigrant-Native Pay Gap, Dr. Tino examines how much of this pay gap reflects employers’ ability to set wages below workers’ productive contributions.

Using matched employer-employee data covering all Canadian tax filers, his model estimates that immigrants are paid 23 per cent below the additional revenue their labour generates, compared with 16 per cent for Canadian-born workers. The estimated difference in marginal productivity between the two groups is considerably smaller, at about five per cent.

The model’s analysis attributes approximately 81 per cent of the pay gap to employer wage-setting power. It also suggests that this power concentrates immigrants in less productive employment matches. Reducing it could therefore increase immigrant pay while improving the allocation of workers across firms and raising overall economic output.