The economic status of elderly Canadians improved steadily after 1971 with the maturation of the Canadian and Quebec Pension Plans (instituted in 1966). The result has been a rise in average real disposable income, greater income equality and a fall in the incidence of low income. Indeed, Canada now exhibits low-income rates for the elderly that are among the lowest in the OECD.[11] How immigrants have fared amid these changes, however, is unclear.

A portrait of the economic status of elderly Canadian immigrants can be derived from data from the 1996 Census of Canada. The Statistics Canada public-use microdata file provides detailed information for 3 percent of all Canadians, or a sample of 792,447 individuals. This includes data on income by source, personal characteristics (such as age, gender and marital status), and data specific to immigration status (country of birth, year of immigration and age at immigration). We define elderly to include all individuals 65 years of age and older.

As Table 2 indicates, there was a significant gap between the incomes of elderly immigrant and native-born Canadians in 1995. Immigrant men received, on average, $1,773 (or 8.5 percent) less income than native-born men, while immigrant women received $1,556 (or 9.2 percent) less than native-born women. The income gap between men and women is fairly consistent, with women receiving 64 percent of what men do.

The incidence of low income, though still high relative to the total population, has fallen dramatically over the past thirty years. Between 1971 and 1985, the percentage of elderly unattached individuals living below the low-income cut-off line fell from 46.8 to 36.8 percent. The incidence of poverty tends to be much higher among unattached individuals as opposed to those living in families.[12] It has continued to decline since; in 1995, 23.6 percent of women and 13.0 percent of men lived below the low-income cut-off line. This said, immigrants face a greater likelihood of low income: one in four women, and one in six men.

Table 2: Average Income and Incidence of Low Income

Elderly Canadians, by Immigration Status and Gender, 1995

A. Average Income

B. Incidence of Low Income

Source: Statistics Canada, 1996 Census Public Use Microdata File on Individuals (Ottawa).

When the average income of elderly immigrants is examined according to place of birth, some striking differences emerge. Table 3 provides a breakdown of average income and the incidence of low income among the elderly according to place of birth and gender. Immigrants from the United States, the United Kingdom and northern Europe generally enjoyed higher incomes and a lower incidence of poverty than native-born Canadians; however, immigrants from the area of Asia, Africa and Central/South America experienced remarkably low average incomes. Expressed as a percentage of the earnings of native-born Canadians, average income was particularly low among immigrants from south Asia (chiefly India and Pakistan, 62% for men and 57% for women); China (47% and 58%); the Philippines (45% and 61%); and Vietnam (37% and 50%). Notable in this respect, and contrary to many popular perceptions of the “wealthy Chinese immigrant,” is the low average income of elderly immigrants from Hong Kong (51% and 64%).

Accordingly, the incidence of low income among immigrants from certain regions is alarmingly high: women from west Asia and the Middle East (43%); men (42%) and women (36%) from Hong Kong; men (45%) and women (36%) from Vietnam; women from Africa (40%); and men (33%) and women (40%) from Central and South America.

Table 3: Mean Income, Relative Indices and Incidence of Low Income

Aged 65 Years and Over by Place of Birth and Sex, Canada, 1995

Source: Statistics Canada, 1996 Census Public Use Microdata File on Individuals (Ottawa).

The overall decline in the incidence of low income among the elderly has been greatly affected by changes in private and public pension plans over the past thirty years. Since the early 1970s, there has been a steady expansion in the value and coverage of the Canada and Quebec Pension Plans (CPP/QPP); employer-sponsored pensions plans; and investment income derived from registered retirement savings plans (RRSP). When added to universal Old Age Security (OAS) and means-tested Guaranteed Income Supplement (GIS) benefits, the average income of elderly Canadians grew more rapidly than that of the population as a whole between 1971 and 1989.[13]

Women benefited less than men from these pension changes. Despite the rising participation rate of women in the paid labour force, expanded provisions for survivor benefits in pension plans, and legal changes that require pension entitlements to be split upon divorce, pension income was more inequitably distributed between men and women. Instead, it was the growth in investment income that caused the gap in average income between elderly men and women to narrow from roughly one half to one third between 1971 and 1985.[14]

The relative dependence of immigrant and native-born Canadians on various forms of income is displayed in Table 4. Income is grouped under three categories: a) income from government transfer payments, including OAS and GIS benefits; b) income derived primarily from previous employment earnings, including CPP/QPP benefits, private pension benefits, RRSPs and investment income; and c) income from current employment and self-employment.

Table 4: Mean Income, by Source of Income

Elderly Canadians by Place of Birth and Gender, 1995

Notes:

1. includes OAS and GIS benefits, and other government transfers unrelated to previous work experience;

2. includes private and CPP pension benefits, RRSP and investment income;

3, includes earnings from employment and self-employment.

Source: Statistics Canada, 1996 Census Public Use Microdata File on Individuals (Ottawa).

For native-born men, 26% of their income in 1995 was derived from government transfers, 60% from personal savings, and 13% from current earnings. The distribution for immigrant men, taken as a whole, is only slightly different. When the immigrant population is examined according to place of birth, however, significant variation emerges. In particular, immigrant men from Asia display a greater reliance upon government transfer payments and current employment/self-employment earnings than on income from previous savings. Of particular note are elderly men from the Philippines for whom 47% of their income is derived from government transfers, 23% from current employment, and only 29% from previous savings; and men from Vietnam who have an extraordinary heavy reliance upon government transfer payments (68%) and extremely low income derived from previous savings (19%).

Elderly women, and elderly immigrant women in particular, display a greater reliance on government transfer payments.[15] Native-born women obtained 42% of their income from government transfers, 52.5% from previous savings, and 5.5% from current employment. The distribution for immigrant women is similar, with a slightly higher dependence on government transfers (44%) and a slightly higher reliance on current employment earnings (7.2%). A much different situation exists for immigrant women from south and southeast Asia. Dependence on government transfer payments is much higher (reaching 75% among women from Vietnam) and in many cases, income from current employment represents a much more significant share of total income (as high as 12.3% among immigrant women from the Philippines).

The low economic status of some elderly immigrants–whether measured in terms of average income, the incidence of poverty or dependence upon government transfers–is alarming. Since the majority of the elderly are no longer in the labour force, their current income is largely derived from saving out of previous employment. Past earnings, in turn, may vary according to a number of factors. Marital status and the number of dependence can affect the degree of labour force attachment; human capital skills (as reflected in the education level and knowledge of an official language) influence an individual’s wage rate or salary level; and age at the time of immigration often dictates the number of years spent in the Canadian labour market. The relative importance of these variables however, cannot be observed directly in the data. It is appropriate, therefore, to estimate the determinants of the income of elderly Canadians using multiple regression techniques.

The reported incomes of 90,712 elderly Canadians in the 1996 Census sample were estimated according to a standard wage function that relates an individual’s earnings to various personal and human capital characteristics. We considered the influence of one’s age, marital status, education level, language skills and immigration status on annual income. Appendix 2 elaborates on the methodology used and provides a more detailed review of the empirical results.

This empirical exercise largely yielded the anticipated results, most notably that annual income is predicted to increase with one’s education level and knowledge of English or French. The issue of greatest immediate concern, however, is the influence of immigration status on income. Specifically, more recent cohorts of immigrants received a much lower income.

In order to illustrate the importance of year of arrival upon predicted income, consider a “representative” man with the average characteristics of all men in the Census sample: he is 73 years of age, with 9.7 years of formal education, speaks English or French and is or was married. The “representative” woman in the sample is 74 years old, with 9.5 years of schooling, speaks an official language and is or was married. Table 5 displays the estimated difference in their incomes in 1995 depending upon their time of arrival in Canada. Had the man arrived before 1950, he would be receiving $21,841; during the 1950s, $20,011; during the 1960s, $18,936; during the 1970s, $15,491; and after 1991, $5,771. A similar income pattern is found for the representative woman.

Table 5: Estimated Annual Income According to Year of Arrival, 1995*

*The representative man is 73 years old, has 9.7 years of schooling, speaks an official language and is married. The representative woman is 74 years old, has 9.5 years of schooling, speaks an official language and is married.

This finding helps explain the low average income and high incidence of poverty among immigrants from south and southeast Asian countries. It is not their country of origin per se that accounts for their low average income, but that they share similar traits, including less proficiency in English or French and a later year of arrival in Canada. With fewer years of work experience in the Canadian labour market, they are less able to save enough income for their retirement years. This emphasizes the need to know more about if and how limitations on employment rights impose an economic burden on immigrants.