The Role of Foreign Credentials and Ethnic Ties in Immigrants' Economic Performance

The literature has identified foreign credential devaluations and the shifting origins of immigrants to non-European sources as two factors that explain why some immigrants earn more than others. This study uses data from the Ethnic Diversity Survey to see how foreign credentials affect immigrants' earnings, and whether immigrants with disadvantaged foreign credentials may be able to use ethnic social capital to mitigate the negative effect. Substantial gross earnings disparities exist among immigrant men and women of different origins, but much difference is due to human capital variations and duration of work. The study produces three major findings. First, foreign credentials benefit majority member immigrants but penalize visible minority immigrants. Second, immigrant men and women who maintain weak ethnic ties earn more than their counterparts with strong ties, suggesting that the enabling capacity of social capital for immigrants has been overstated. Third, there is no evidence of ethnic social capital being able to mitigate the negative effect of a credential deficit.