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Self-Selection, Immigrant Public Finance Performance and Canadian Citizenship

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Author Info

  • DeVoretz, Don J.

    () (Simon Fraser University)

  • Pivnenko, Sergiy

    () (Simon Fraser University)

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    Abstract

    This paper consists of two parts focusing on the immigrant’s decision to acquire Canadian citizenship, and her subsequent performance as a taxpayer and recipient of public finance transfers. Our results support the view that selectivity bias appears in Canadian immigrant citizenship decisions and varies by immigrant gender and source country groups. Our Oaxaca decomposition results demonstrated the importance of the human capital endowment in explaining selectivity corrected citizenship-non-citizenship earnings differences. Next, we confirmed the standard results that the naturalization decision is conditioned by the expected wage gain, level of education, marital status, age and presence of children. At the macro level, our study focused on the implications of Canadian citizenship for the lifetime public finance contributions by naturalized immigrants. All immigrants, regardless of their source country group and citizenship status, made a positive contribution to Canada’s treasury circa 1996 over their life cycle. Naturalized citizens from OECD countries contributed the largest public finance transfers exceeding the corresponding value for the Canadian-born by more than $14,000. In addition, naturalized citizens made higher net contributions than their non-citizen counterparts regardless of source country. The relatively poor public finance performance of non-citizens was explained by their lifetime low income and low tax payments.

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    Bibliographic Info

    Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1463.

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    Length: 36 pages
    Date of creation: Jan 2005
    Date of revision:
    Publication status: published in: P. Bevelander and D. DeVoretz (eds.), The Economics of Citizenship , IMER Press, Malmo Sweden, 2008
    Handle: RePEc:iza:izadps:dp1463

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    Related research

    Keywords: immigration; public finance; Canada; citizenship;

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    References

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    1. Ronald Oaxaca, . "Male-Female Wage Differentials in Urban Labor Markets," Working Papers 396, Princeton University, Department of Economics, Industrial Relations Section..
    2. Bernt Bratsberg & James F. Ragan & Zafar M. Nasir, 2002. "The Effect of Naturalization on Wage Growth: A Panel Study of Young Male Immigrants," Journal of Labor Economics, University of Chicago Press, vol. 20(3), pages 568-597, July.
    3. Chris Robinson & Nigel Tomes, 1982. "Self-Selection and Interprovincial Migration in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 15(3), pages 474-502, August.
    4. Cotton, Jeremiah, 1988. "On the Decomposition of Wage Differentials," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 236-43, May.
    5. Ides Nicaise, 2001. "Human capital, reservation wages and job competition: Heckman's lambda re-interpreted," Applied Economics, Taylor and Francis Journals, vol. 33(3), pages 309-315.
    6. Neuman, Shoshana & Oaxaca, Ronald L, 1998. "Estimating Labour Market Discrimination with Selectivity Corrected Wage Equations: Methodological Considerations and an Illustration from Israel," CEPR Discussion Papers 1915, C.E.P.R. Discussion Papers.
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    Cited by:
    1. Max Friedrich Steinhardt, 2008. "Does citizenship matter? The economic impact of naturalizations in Germany," Development Working Papers 266, Centro Studi Luca d\'Agliano, University of Milano.

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