Essays on Immigration and Economic Policy

In the first essay, I study job-education mismatch and estimate its impact on the earnings of recent immigrants to Canada. Previous related studies have largely ignored cross-country differences in schooling quality. This essay presents a novel idea to account for cross-country differences in the quality of education, using Card and Krueger’s (1992) two-step approach. The earning impact of job-education mismatch is estimated using an Over-Required-Under Education technique. Data from the Longitudinal Survey of Immigrants to Canada is used, and both cross sectional and panel data estimation methods are used to estimate the earning equations. Results show that recent immigrants to Canada have a persistent high incidence and intensity of over-education with substantial negative impact on their earnings. Most importantly is that not accounting for differences in educational quality across source countries leads to: 1) Overstating (understating) the incidence of over-education (under-education). 2) Understating (overstating) the return to over-education (under-education) for immigrants from countries with low quality of schooling. 3) Overstating (understating) the return to over-education (under-education) for immigrants from countries with high quality of schooling. In the second essay, I quality-adjust human capital acquired from different source countries. This is achieved by explicitly deriving quality-adjustment indices, using data on adult males from the 2001 Canadian census. The derived indices are then used to examine the role of schooling quality in explaining the differential returns to schooling and over-education rates by nativity. I also use these indices to identify important inputs in the production technology of schooling quality. The key finding of this study is that accounting for schooling quality virtually eliminates the native-immigrant gaps in the returns to schooling and in the incidence of over-education. Results show wide variations in the return to schooling across countries. These variations are significantly explained by cross-country differences in educational resources, particularly government educational expenditure and the length of the school term. The third essay studies the effect of graphic cigarette warning labels on smoking prevalence and quit attempts. The Generalized Estimating Equation model is used to estimate the population-averaged (marginal) effects of tobacco graphic warnings on smoking prevalence and quit attempts. It is found that graphic warnings had a statistically significant effect on smoking prevalence and quit attempts. In particular, the warnings decreased the odds of being a smoker and increased the odds of making a quit attempt