Working Papers
Behavioural Responses to Tax and Cultural and Social Norms: Evidence from Immigrants in Canada, (Job Market Paper).
Understanding how cultural and social norms influence taxpayers’ responses to tax policy changes is crucial for promoting tax compliance and morale. In this paper, I exploit exogenous variation in tax rates resulting from a series of Canadian tax reforms and use detailed administrative data to estimate the elasticity of taxable income (ETI) and investigate whether differences in norms explain the observed heterogeneity in the ETI. I find that immigrants’ ETI (0.094) is larger than that of non-immigrants (0.078). I attribute these heterogeneous responses to the differences in cultural and social norms. To drive this point home, I estimate the ETI by immigrants’ countries of origin separately and examine how these ETI estimates vary with the country of origin’s cultural norms. I find that immigrants from countries with a high level of trust in others and the government exhibit lower ETI. In comparison, immigrants from countries with high power inequality and corruption exhibit larger ETI. The findings show that cultural norms shape tax behaviour and suggest that promoting trust in government may enhance tax compliance.
"Unpacking the elasticity of taxable income: What drives it? Evidence from Canadian Federal and Provincial tax reforms."
Identifying which income sources drive the ETI is crucial for designing policies that curb tax avoidance and minimize deadweight loss. In this paper, I estimate and decompose the ETI, breaking it down into its components. First, I present compelling graphical evidence of behavioural responses to tax around three major Canadian federal income tax reforms. Prior to each reform, treatment and control groups showed similar income trends, but diverged significantly afterward, providing convincing evidence of income responsiveness to tax. The overall ETI is lower than the ones reported in many typical U.S. studies. High-income individuals’ large responses primarily result from interprovincial income shifting and the use of tax-deferred savings. ETI varies substantially by the sources of income: capital income and self-employment income respond highly to tax rate changes due to their differential tax treatment.
"Citizenship Acquisitions and Immigrants' Labour Market Outcomes: Evidence from Canadian Immigration Policy Changes."
In this paper, I investigate whether expedited access to citizenship and citizenship acquisition affect the economic integration of immigrants. Exploiting exogenous variations in citizenship rules and applying an instrumental variables strategy, tightened eligibility rules reduce naturalization among the affected immigrants. While immigrants’ employment income and prospects improved modestly after acquiring Canadian citizenship, the gain is more pronounced for specific immigrant categories. I also find that naturalized immigrants are less likely to rely on welfare benefits and are less mobile across provinces or cosmopolitan areas, suggesting increased settlement stability. Naturalized immigrants are also less likely to be self-employed, suggesting that they have access to formal employment. While immigrants experience improvements in their labour market outcomes after acquiring Canadian citizenship, the gain may be smaller than previously thought, particularly when endogeneity is taken into account in evaluating these effects.
"Minimum Wage Policy and Immigrants' Choices of Residence: Evidence from Canadian Provincial Minimum Wage Laws."