By Mata Press Service

Canada ranks near the bottom among high-income countries when it comes to closing the pay gap between immigrants and native-born workers, according to a sweeping new international study published in  Nature.

The research, conducted by an international team of sociologists and economists, found that immigrants in Canada earn roughly 28 to 29 percent less than native-born workers, even after adjusting for education, age, sex, and region of employment. Only Spain posted a larger gap among the nine countries analyzed.

Using linked employer–employee records for more than 13.5 million workers in Canada, Denmark, France, Germany, the Netherlands, Norway, Spain, Sweden, and the United States, the researchers examined whether the immigrant–native pay gap is primarily caused by unequal pay for the same work or by the sorting of immigrants into lower-paying jobs.

The verdict for Canada is clear. “In Canada, immigrants earned about 28–29 percent less than natives after adjusting for education, age, sex, and region,” the authors wrote. “Even when working in the same occupation for the same employer, immigrants still earned 9 percent less than native coworkers — one of the highest within-job gaps among the included countries.”

The study finds that job segregation accounts for roughly three-quarters of Canada’s immigrant–native pay gap. This means that most of the disparity is due to immigrants having less access to higher-paying positions, not simply being paid less for doing the same work.

Across all countries studied, 74 percent of the pay gap is explained by such between-job segregation, while the remaining 26 percent reflects within-job inequality. In Canada, both components are more pronounced than in many of the peer nations examined.

The authors note that these differences are often rooted in barriers such as challenges in foreign credential recognition, limited access to professional networks, and language proficiency gaps. “Unequal access to higher-paying jobs is the primary driver of the immigrant–native pay gap across a range of institutionally and demographically diverse contexts,” the study stated.

One of the most encouraging findings comes from the second generation. Canadian-born children of immigrants have a total earnings gap of only about 2 percent compared to native-born Canadians. When working in the same job for the same employer, the difference falls to about 1 percent and is often statistically insignificant.

“The substantial reduction in the gap for Canadian-born children of immigrants highlights the importance of access to domestic education and skills recognition,” the authors wrote.

However, the report warns that newcomers still face steep initial disadvantages. “Recent immigrants experience larger total and within-job earnings gaps than established immigrants and immigrants who arrived as children, but between-job segregation accounts for the majority of the immigrant–native earnings differences for all groups,” the study stated.

The data shows that immigrants from Western countries face smaller pay gaps, while those from Sub-Saharan Africa and the Middle East/North Africa face the largest disadvantages. For these groups, within-job pay differences remain significant, meaning they often earn less than native-born colleagues doing the same work.

In every origin group, sorting into lower-paying jobs is the main driver of the gap. The report notes that “sorting across jobs — along with industries, occupations and workplaces — remains the primary driver of immigrants’ earnings disadvantages regardless of world region of origin.”

In countries such as Sweden and Denmark, immigrants earn only 7 to 11 percent less than natives, and in Sweden there is no measurable within-job disadvantage. By contrast, Canada’s within-job pay gap of 9 percent is one of the highest in the study.

The United States, Denmark, and Norway also have much smaller within-job gaps, ranging from 2 to 5 percent. The differences suggest that national policies and labour market structures play a significant role in shaping immigrant earnings outcomes.

The authors argue that closing the pay gap will require more than enforcing equal pay for equal work. “Policies should focus on improving immigrants’ access to better-paying jobs through enhanced language training, job training, recognition of foreign qualifications, improved access to education, and better job search assistance,” the study stated.

They also recommend targeting bias in hiring and promotion decisions, noting that such efforts “may be more effective than simply enforcing equal pay for equal work.” Effective strategies used in other contexts include settlement programs that connect immigrants to job-relevant networks and active labour market programs tailored to different skill levels.

Unlocking economic potential

The findings suggest that Canada’s main challenge is not primarily wage discrimination within jobs, but the structural barriers that keep immigrants from securing better-paying positions in the first place. Addressing these barriers could have a major economic payoff, given the central role immigration plays in Canada’s labour force growth.

“The central role of job-sorting processes in driving the immigrant pay gap highlights a set of mechanisms that policies aimed at reducing job-level segregation can effectively target,” the authors stated. “By addressing barriers that limit access to higher-paying jobs, these interventions target the key job-sorting process identified in our analysis.”

With Canada depending on immigration to meet its demographic and labour market needs, the study’s authors say reducing these disparities is both an equity and an economic imperative. The strong outcomes for the second generation show that when integration works, the results can be transformative, not only for individuals, but for the economy as a whole, the study said.