Should I Stay or Should I Go? The Impact of Taxation on Canadian Inter-Provincial Migration

Adam Lavecchia (), Robert McKercher () and Alisa Tazhitdinova ()
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Adam Lavecchia: McMaster University
Robert McKercher: McMaster University
Alisa Tazhitdinova: University of California, Santa Barbara and NBER

No 18544, IZA Discussion Papers from IZA Network @ LISER

Abstract: This paper estimates the causal effect of income taxation on inter-provincial migration in Canada. We exploit a major tax decentralization reform between 1998-2001 that led to some provinces lowering their marginal and average tax rates more than others, particularly for top earners. Using a difference-in-differences design, we estimate a population stock-elasticity with respect to the net-of-average-tax rate of about 2.5-3 for young, unmarried high-income individuals. The estimates for older and married individuals are smaller and mostly statistically insignificant. We find that the population stock elasticity estimates are driven by a reduction the likelihood that young, unmarried and high-income individuals emigrate from their province of residence (i.e. out-migration) rather than a change to in-migration. This suggests that individuals react more strongly to tax changes in their home province rather than tax changes in other provinces.

Keywords: migration; taxation; within-country mobility (search for similar items in EconPapers)
JEL-codes: H2 H21 H24 H26 H71 (search for similar items in EconPapers)
Date: 2026-04
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