The Economics of Canadian Citizenship

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The Economics of Canadian Citizenship A Common
Ground for Social Scientists ?
Don J. DeVoretz Senior Research, MBC Professor,
Simon Fraser University Canada don.devoretz_at_sfu.
ca Presentation to Metropolis June 24th ,
2009 Ottawa, Canada
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Overview

• Economists and inter-disciplinary work
• Limited Success
• RIIM example
• Necessary and Sufficient ingredients
• Correct research question(s)
• Lends itself to utility maximazition with
• derivable hypotheses
• Empirical verification
• Translate demographic, political into costs or
  benefits
• Economics of Citizenship fulfills the above

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Objective of Research on Economics of Citizenship

• To answer
• Why do immigrants ascend to citizenship at
  different rates ?
• What are the economic consequenses of this
  ascension ?
• To Model
• The affect of economic (income, occupation),
  social (marital status, household size, children,
  etc.), political (dual citizenship up or out,)
  and demographic (age, years in host country)
  variables on the immigrant decision to ascend to
  citizenship
• The economic impact of citizenship on the
  occupational distribution and earnings levels of
  immigrants

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Literature Ascension Non-Economists

• Yang (1994)
• Demographic, political and social variables.
• Bloemraad (2002)
• Canadian dual citizenship more likely if
• Youth, education and offical language in Canadian
  home
• Mata, Fernando. (1999)
• Principal Components 1996 Canadian Census
• No evidence of economic impact of Canadian
  citizenship
• Yang (1994)
• Conclusion Ad hoc and no role for economic
  variables

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Literature Economic Impact

• Pivnenko and DeVoretz (2003)
• evidence of citizenship affect on Ukrainian
  earnings in Canada
• Earnings of Ukrainain foreign-born citizens
  equals Canadian-born Ukrainians
• Chiswick (1976)
• Found no evidence for citizenship effect in USA.
• Bratsberg B, et. al(2002)
• Youth panel data in USA
• citizenship alters occupational distribution and
  raises earnings
• Affect is greater for immigrants from less
  developed areas

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Methodological Conclusions

• No comprehensive study of ascension and economic
  impact of citizenship to date.
• Economic Methodology supports merging of two
  questions
• Utility maximization at the ascension stage
  affects economic impact e.g. human capital
  accumulation during ascension stage

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Why the Ascension Gap?

• Presence of Dual citizenship ?
• Level of development home country ?
• Externalities of Home country passport
• Length of stay in Canada
• Temporary or permanent ?
• Ease of Family Renification ?
• Remittance costs vs parental help with kids

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Why Smaller Age Earnings Gap After Citizenship ?
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Employment Outcomes
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Costs and Benefits of Ascending to Canadian
Citizenship

• Costs
• no access to the home country labour market
• the possible loss of the right to hold land, or
  the requirement to pay higher land taxes
• loss of entitlement to home country public
  services, such as subsidized education for
  children
• curtailing of social benefits in home origin
  country.
• Benefits
• access to the federal government labour market
• potential access to merged labour markets (e.g.
  NAFTA or EU)
• any wage premium paid by private employers to
  citizens
• a host country passport with its implied visa
  waivers, which lead to greater worldwide
  mobility
• immunity from a military conscription in home
  country
• ability to participate in the political process

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Some Empirical Evidence on Immigrant Citizenship
Ascension

• Prediction ALL HOLD
• Rates of ascension to citizenship are a positive
  function
• of age,years in Canada, gt0
• occupation status, gt0
• home countries absence of dual citizenship
  policy,lt0
• marital status and presence of children gt0
• and ECONOMIC GAINS gt0 and

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Citizenship Impact on Earnings

• Citizenship increased earnings
• More for non-OECD immigrants
• Females 12.6 , males 14.4 Non-OECD
• Females 5.8 , males 4.1 OECD
• All other variables as predicted

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Blinder-Oaxaca Decomposition

• Decompose sources of earnings differences for
  citizens and non-citizens
• Endowment differences
• Discrimination
• amount that productive characteristics of
  Foreign-born are overvalued or undervalued
  relative to Canadian-born

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Table 3. Decomposition of wage differentials between naturalized and native-born Canadians1 Table 3. Decomposition of wage differentials between naturalized and native-born Canadians1 Table 3. Decomposition of wage differentials between naturalized and native-born Canadians1 Table 3. Decomposition of wage differentials between naturalized and native-born Canadians1
Human capital endowments effect Discrimination component Wage differential
Females Females Females
OECD 5.91 -5.57 0.34
non-OECD 9.87 10.94 20.81
Males Males Males
OECD -5.81 -7.06 -12.86
non-OECD 5.10 21.45 26.55
Source DeVoretz and Pivnenko (2006) Source DeVoretz and Pivnenko (2006) Source DeVoretz and Pivnenko (2006) Source DeVoretz and Pivnenko (2006)

1 These estimates are based on the log-linear
OLS
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Decomposition Conclusions End of Discrimination ?

• OECD Males earn 12.86 more as citizens because
• Greater human capital than Canadian-born
• Greater return on human capital
• OECD Males earn 26.5 less as citizens because
• 21.45 smaller rewards for human capital and
• 5.1 less human capital than Canadian-bonr

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Conclusions on the Common Ground

• Citizenship Ascension and Economic Impacts
  should be jointly modeled
• Economic, Political and Social variables should
  be merged
• Need Comparative studies across
• Countries Netherlands, Sweden, USA
• Disciplines Political Science