The Agenda

The Differences Between Low-Income Households in Canada and the U.S.

Christopher Flavelle of Bloomberg View contrasts the generosity of higher education subsidies for low-income students in the United States and Canada. Drawing on research published last year, he observes that “coming from a poor family makes you much less likely to go on to higher education in the U.S. than in Canada, even after controlling for intelligence and other factors.” Moreover, this is true despite the fact that Canada offers far less generous financial assistance to its low-income students than the U.S.

Before we go on, it is worth noting that the researchers Flavelle cites, Philippe Belley, Marc Frenette, and Lance Lochner, control for difference in adolescent cognitive achievement and other factors. What does the gap in college and university attendance look like before we control for these factors? Belley et al. addressed this question in a VoxEU summary of their work:

Given the lower costs faced by disadvantaged American students compared with their Canadian counterparts, we might expect to see a weaker income–university attendance relationship in the US. This is not the case, however, as Figure 3 demonstrates with similar data in both countries (the 1997 cohort of the National Longitudinal of Youth in the US and cohort A of the Youth in Transition Survey in Canada). The gap in university attendance between youth in the highest and lowest parental income quartiles stands at about 20 percentage points in Canada. In the US, the gap is more than twice as large (roughly 45 percentage points). The difference between these income-attendance gaps is largely due to the lower attendance rate among low-income youth in the US. At the top end of the income distributions, attendance rates are about the same in both countries.

Why then do we see a much larger university-attendance gap in the US if costs are lower among the disadvantaged? Differences in family background, adolescent cognitive achievement, and local area of residence explain slightly more than half of the difference. Conditional on these factors, the gap falls to 18 percentage points in the US and to 7 percentage points in Canada. The conditional attendance gaps at four-year post-secondary institutions are about the same: 8 percentage points in Canada versus 17 percentage points in the US. A larger gap remains in the US even after accounting for many other observed characteristics.

It is conceivable that the greater generosity towards disadvantaged youth in the US is itself the result of very weak demand for post-secondary schooling among this group. In this case, the income-attendance gradient would be even steeper in the US relative to Canada in the absence of need-based aid. [Emphasis added]

The fact that correcting for differences in family background, adolescent cognitive achievement, and local area of residence cuts Canada’s advantage over the U.S. so dramatically serves as a reminder that along all of these dimensions, children raised in low-income Canadian households fare better than their U.S. counterparts. There are other noteworthy differences that Belley et al. cite in a 2011 working paper: 

Comparisons across samples suggest that schooling attainment is higher in Canada, except at the top end. Both high school and PS attendance rates are about 10% higher in Canada than the U.S. (93% vs. 83% for PS attendance and 71% vs. 63% for high school completion). By contrast, 42% of youth attended a 4-year PS school in both countries. Educational attainment is also higher among Canadian mothers. Compared to American youth, Canadian youth are less likely to be non-white, but more likely to be first- or second-generation immigrants. Canadian youth also tend to have slightly older mothers and are more likely to have both biological parents present in the household during adolescence. Fewer Canadian youth grow up in metropolitan areas. [Emphasis added]

And while a large share of the U.S. population is of African American and Latino origin — populations that have faced a number of historical challenges — Canada’s large foreign-born population is heavily European and Asian, and its immigration policy is skewed towards people with high levels of educational attainment. This, in turn, raises the educational attainment of Canadian mothers. 

Though Flavelle makes no reference to differences in U.S. and Canadian immigration policy, the work of Belley et al. reminds me, at least, that immigration policy has consequences that unfold over multiple generations. The U.S. has a large native-born population with low levels of educational attainment. Immigration policy can either raise the average skill level in the U.S. or lower it. Current U.S. immigration policy lowers the average skill level of the workforce. An immigration policy that raises the average skill level would have a number of secondary effects, e.g., the mothers of second-generation Americans would have a higher level of educational attainment than is currently the case, and second-generation Americans would be less likely to experience family disruption. And if the first- and second-generation population experienced lower levels of disruption and earned higher incomes, more resources could be devoted to meeting the needs of the native-born poor. 


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