International students who graduate from the University of Waterloo earn more, on average, than their Canadian-born counterparts and transitioned to permanent residency at nearly twice the national rate, according to a new study.
At a time when Canada’s international student program is under fire, Waterloo economist Mikal Skuterud and co-authors Joel Blit and Ruiwen Zhang have produced research about their institution – described as “the MIT of the North” in their paper’s title – that offers ideas for getting the program back on track.
The authors argue Canada should adopt a “quality over quantity” approach to attract top students from around the world and encourage them to stay. When selecting new permanent residents, they say, the process should consider the school the applicant attended and their field of study.
The number of international students in Canada tripled in a little more than a decade to more than a million in 2024, a shift that brought billions in new revenue to universities and colleges. But in January, the federal government slammed the brakes, reducing the number of visas it will issue by 35 per cent this year, and a further 10 per cent next year, citing strain in the housing market.
For their study, Prof. Skuterud and his co-authors were granted remarkable access to data that linked Waterloo student files, including grades, to immigration records and income tax filings over 17 years. The total sample is more than 86,000 graduates from 2005 to 2021. The research was published last month as a working paper by the Canadian Labour Economics Forum.
The study found that Waterloo’s international graduates have earnings that start slightly higher and rise slightly faster, on average, than those of Canadian-born students. That advantage has grown in recent years, as international students have earned even higher starting wages. The cohort of international students that graduated between 2017 and 2019, for example, earned an average of 37 per cent more than their Canadian-born counterparts one year after leaving school, at $57,500 compared with $42,000.
Average labour income of graduates one to two years after graduation, by school and student type
Constant 2020 dollars
Foreign-born
Student:
International
Canadian-born
2005 GRADUATES
UWaterloo
UWaterloo
University
University
College
University
College
UWaterloo
College
0
10
20
30
40
50
$60K
2010 GRADUATES
UWaterloo
University
UWaterloo
University
UWaterloo
University
College
College
College
0
10
20
30
40
50
$60K
2015 GRADUATES
UWaterloo
UWaterloo
UWaterloo
University
University
College
College
University
College
0
10
20
30
40
50
$60K
Note: Income of 2005 graduates is one year after graduation. Income of 2010 and 2015 graduates is two years after graduation. Estimates for the university and college graduates are from National Graduates Survey and are nationally representative.
SOURCE: CANADIAN LABOUR ECONOMICS FORUM
Average labour income of graduates one to two years after graduation, by school and student type
Constant 2020 dollars
Student:
Foreign-born
International
Canadian-born
2005 GRADUATES
UWaterloo
UWaterloo
University
University
College
University
College
UWaterloo
College
0
10
20
30
40
50
$60K
2010 GRADUATES
UWaterloo
University
UWaterloo
University
UWaterloo
University
College
College
College
0
10
20
30
40
50
$60K
2015 GRADUATES
UWaterloo
UWaterloo
UWaterloo
University
University
College
College
University
College
0
10
20
30
40
50
$60K
Note: Income of 2005 graduates is one year after graduation. Income of 2010 and 2015 graduates is two years after graduation. Estimates for the university and college graduates are from National Graduates Survey and are nationally representative.
SOURCE: CANADIAN LABOUR ECONOMICS FORUM
Average labour income of graduates one to two years after graduation, by school and student type
Constant 2020 dollars
Student:
Foreign-born
International
Canadian-born
2005 GRADUATES
2010 GRADUATES
2015 GRADUATES
UWaterloo
UWaterloo
UWaterloo
UWaterloo
University
UWaterloo
University
UWaterloo
UWaterloo
University
University
University
College
UWaterloo
University
University
University
College
College
College
College
UWaterloo
College
University
College
College
College
0
10
20
30
40
50
$60K
0
10
20
30
40
50
$60K
0
10
20
30
40
50
$60K
Note: Income of 2005 graduates is one year after graduation. Income of 2010 and 2015 graduates is two years after graduation. Estimates for the university and college graduates are from National Graduates Survey and are nationally representative.
SOURCE: CANADIAN LABOUR ECONOMICS FORUM
A large part of the explanation, the authors said, is that international students are more likely to pursue fields of study that lead to careers with higher wages, such as engineering and computer science. The improvement over time may also be an indication that the university has steadily refined its ability to select students who are more likely to succeed, the authors said.
They also found that international students with lower earnings tended to have earned weaker grades and to have demonstrated more difficulties in English. That suggests their lower earnings reflect a lower level of skills when compared with their peers.
About 70 per cent of the former Waterloo students in the study became permanent residents, much higher than Statistics Canada’s national data, which shows that only about 30 to 40 per cent of international students with a bachelor’s degree attain PR status within a decade of receiving their first study permit.
Student visa approvals projected to drop by almost half this year: report
Prof. Skuterud said that if Canada is trying to leverage the economic value of immigration, the goal should be to raise the overall human capital of the population. And he says the findings, though based on the University of Waterloo, offer lessons for the national immigration strategy.
“In my view, the international student program should be about cream-skimming the talent pool, using our universities to attract talent from around the world, and, in turn, trying to settle those individuals at high rates,” Prof. Skuterud said.
He believes Canada should focus on selecting permanent residents based on the comprehensive ranking system, which awards points based on education, language ability, work experience and other factors, although he suggested some additional categories should be added to the matrix.
Average T4 earnings conditional
on positive T4 earnings
By year of graduation and years since graduating,
in thousands of 2020 $
2005-07
2008-10
2011-13
2014-16
2017-19
$140
$140
$140
120
120
120
100
100
100
80
80
80
60
60
60
40
40
40
20
20
20
0
0
0
2
4
6
8
10
12
2
4
6
8
10
12
2
4
6
8
10
12
Canadian-born
students
International
students
Foreign-born
PR students
the globe and mail, source: canadian labour economics forum
Average T4 earnings conditional
on positive T4 earnings
By year of graduation and years since graduating,
in thousands of 2020 $
2005-07
2008-10
2011-13
2014-16
2017-19
$140
$140
$140
120
120
120
100
100
100
80
80
80
60
60
60
40
40
40
20
20
20
0
0
0
2
4
6
8
10
12
2
4
6
8
10
12
2
4
6
8
10
12
Canadian-born
students
International
students
Foreign-born
PR students
the globe and mail, source: canadian labour economics forum
Average T4 earnings conditional on positive T4 earnings
By year of graduation and years since graduating, in thousands of 2020 $
2005-07
2008-10
2011-13
2014-16
2017-19
$140
$140
$140
120
120
120
100
100
100
80
80
80
60
60
60
40
40
40
20
20
20
0
0
0
2
4
6
8
10
12
2
4
6
8
10
12
2
4
6
8
10
12
Canadian-born
students
International
students
Foreign-born
PR students
the globe and mail, source: canadian labour economics forum
At the moment, the ranking system doesn’t award points based on field of study. A visual arts degree and a computer science degree are similarly rewarded, Prof. Skuterud said. It also doesn’t distinguish between schools, so those who attended a university that consistently produces high-earning graduates are treated the same as those from schools that don’t perform well.
“The beauty of that is it incentivizes universities to produce good outcomes for their students,” he said.
But over the past decade, the share of international students going to colleges has sharply increased. More than a quarter of Ontario’s 24 publicly funded colleges had more international than domestic students in 2021-22.
The Ontario government gave about 80 per cent of its international study permit allocation to colleges this year, and only about 15 per cent to universities, which Prof. Skuterud calls a “quantity over quality” approach. The group that has the lowest earnings one to two years postgraduation are international students who graduated from college.
“The best indicator of high human capital is a person’s expected future earnings in Canada,” he said.
“Every time you prioritize a college graduate with a business diploma, which is what’s happening, you’re de-prioritizing a computer science graduate from Waterloo. To me, it’s a really bad trade-off.”
Editor’s note: (Oct. 9, 2024): This article has been updated to correct the spelling of study co-author Joel Blit, and to clarify that the study sampled a total of more than 86,000 graduates, not only international student graduates.