By Mata Press Service

Canada may be attracting record numbers of highly educated immigrants, but it is failing to match the labour market outcomes those newcomers achieve in the United States, a new study by the Fraser Institute warns.

Despite admitting a larger share of immigrants with university degrees and STEM backgrounds, Canada trails the U.S. in both employment success and earnings for these workers.

The report, The Gap in the Labour Market Performance of Highly Educated Immigrants in Canada Relative to the United States—And How to Narrow It, compares the performance of immigrants with bachelor’s degrees and higher in both countries and finds that American markets deliver stronger rewards for highly skilled talent.

According to the accompanying news release, “highly educated immigrant workers in the U.S. perform better when it comes to employment and compensation than their counterparts in Canada.”

Canada has built its immigration system around attracting university-educated applicants, especially in science, technology, engineering and mathematics (STEM). More than half of recent immigrants to Canada hold a bachelor’s degree or higher—well above U.S. levels. But the study finds that those credentials are not translating into economic success in Canada.

The data reveal that in Canada, highly educated immigrants earn 16 percent less than Canadian-born workers with equivalent education and have a 9.5 percent lower employment rate. In contrast, highly educated immigrants in the U.S. have a 1.2 percent higher employment rate than native-born Americans and earn eight percent more on average.

“The evidence suggests that the U.S. offers greater opportunities and rewards than Canada and therefore is better positioned to attract the most productive, highly-educated and skilled immigrants,” said Steve Globerman, senior fellow at the Fraser Institute and co-author of the study.

One of the most persistent problems facing newcomers in Canada is underemployment. Many highly educated immigrants find themselves in jobs that do not require their skills—often working far below their qualifications. The report cites data showing that more than one in four recent university-educated immigrants in Canada are working in positions requiring only a high school diploma.

Researchers attribute this to rigid professional licensing systems, limited employer recognition of foreign credentials and a labour market that is slower to reward international experience. The U.S., while not without barriers, provides faster entry into high-skill industries through employer-driven hiring via visas such as the H-1B.

“Highly educated immigrants make important economic contributions to the countries they emigrate to, notably through promoting innovation and entrepreneurship,” said co-author Jock Finlayson.

Yet, the authors argue, Canada is failing to leverage this potential.

Beyond immigration policy, the study identifies deeper structural issues within the Canadian economy that hinder labour market outcomes. Compared to the U.S., Canada has fewer large, innovation-driven companies capable of absorbing highly skilled talent at competitive wages. American tech giants, research hubs and financial centres offer stronger incentives, stock-based compensation and global career mobility.

In fields such as software engineering, biotechnology and advanced manufacturing, U.S. firms simply pay more. Prior research cited in the study shows that American technology workers earn up to 46 per cent more than comparable Canadian workers after adjusting for cost of living, with additional non-wage benefits nearly twice as high.

With these realities, the “brain drain” of STEM-trained workers—both immigrants and Canadian-born—remains a pressing concern.

To narrow the performance gap, the Fraser Institute authors call for significant changes to immigration selection and economic policy.

First, they recommend incorporating more employer input when selecting skilled immigrants, moving closer to the U.S. approach, where companies directly sponsor and integrate high performers. They also urge the federal government to create an H-1B-style visa for elite global talent and expedite processing under the Express Entry system.

Second, the report criticizes Canada’s current international student strategy, noting that too many study permits are issued for programs with weak labour market outcomes. Instead, it argues for prioritizing international students in high-demand, high-pay sectors.

Third, the study stresses that immigration reform alone is insufficient. Canada must improve its economic environment through increased capital investment, business productivity, competitive tax rates and policies that support domestic scale-up companies.

“For Canada to more successfully compete for the ‘best and brightest’ global talent, policies to improve immigrant selection and to create a more dynamic and productive Canadian economy will be necessary,” said Globerman.

The report also points to global geopolitical shifts, particularly in U.S. immigration policy, as a temporary opening for Canada. Should Washington tighten visa access under a future administration, Canada may become more attractive to highly skilled migrants. But without internal labour market reform, the authors argue, Canada risks becoming a transit point rather than a destination.

The study concludes that Canada’s future prosperity depends not only on bringing in more highly educated immigrants but on ensuring that they can achieve their full economic potential once they arrive.

The Fraser Institute is an independent, non-partisan public policy organization. It does not accept government funding and publishes research on economic policy, taxation, labour markets and productivity. This study is part of its ongoing examination of immigration and labour market performance.