Wealth accumulation of Canadian and foreign-born households in Canada

This study focuses on the role of foreign-born households in Canada's asset market. An empirical analysis of wealth accumulation is conducted for a large sample of Canadian households circa 1977-84. This study period reflects a change in Canada's immigration policy which resulted in immigration flows switching from Europe to Asia. A life-cycle framework is used to examine wealth accumulation behaviour of the foreign-born vis-a-vis Canadian-born households. The empirical results confirm the existence of an inverted 'U'-shaped wealth-age profile for both Canadian and immigrant households. However, the 1977 results show that the rate of wealth accumulation is higher for the immigrant household than the Canadian-born household in pre-retirement years, while the 1984 results reveal the opposite. After retirement, the rate of wealth dissipation is slower for Canadians than for foreign-born households. Only the 1984 results indicate that public social security wealth displaces household savings for both the Canadian-born and the foreign-born by a small amount. Finally, an immigrant household exhibits a stronger transfer motive within a family than a Canadian-born household regardless of year tested.