Self-Selection, Immigrant Public Finance Performance and Canadian Citizenship

Don DeVoretz and Sergiy Pivnenko ()
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Sergiy Pivnenko: Simon Fraser University

No 1463, IZA Discussion Papers from Institute of Labor Economics (IZA)

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.

Keywords: immigration; public finance; Canada; citizenship (search for similar items in EconPapers)
JEL-codes: F22 J61 J68 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2005-01
New Economics Papers: this item is included in nep-bec and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published - published in: P. Bevelander and D. DeVoretz (eds.), The Economics of Citizenship , IMER Press, Malmo Sweden, 2008

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