-
Are Immigrants Particularly Entrepreneurial? Firm Ownership as a Key Element in Immigrant Income Assimilation
With David A. Green, Huju Liu, Yuri Ostrovsky, and Garnett Picot
Accepted at the Journal of Labor Economics
Abstract | Paper Firm ownership is a defining feature of immigrant adaptation: 46% of immigrants own a firm at some point in their first 15 years post-arrival. We use Canadian data linking immigrant arrival records with individual and firm tax data to examine the process of entering firm ownership for immigrants. Higher immigrant firm ownership rates are mainly due to nonincorporated firm ownership, which looks like a last resort. Human capital plays no role in the opening of preferable, incorporated firms. Immigrants are not more entrepreneurial in terms of opening incorporated firms with employees, and standard policy levers appear to have limited effects.
-
Causal Inference with Groupwise Matching
With Kevin Song
Abstract | Paper | SCD package in R This paper examines methods of causal inference based on groupwise matching when we observe multiple large groups of individuals over several periods. We formulate causal inference validity through a generalized matching condition, generalizing the parallel trend assumption in difference-in-differences designs. We show that difference-in-differences, synthetic control, and synthetic difference-in-differences designs are distinguished by the specific matching conditions that they invoke. Through regret analysis, we demonstrate that difference-in-differences and synthetic control with differencing are complementary; the former dominates the latter if and only if the latter’s extrapolation error exceeds the former’s matching error up to a term vanishing at the parametric rate. The analysis also reveals that synthetic control with differencing is equivalent to difference-in-differences when the parallel trend assumption holds for both the pre-treatment and post-treatment periods. We develop a statistical inference procedure based on synthetic control with differencing and present an empirical application demonstrating its usefulness.
-
Working Income Tax Benefits, Minimum Wage, and Employment Transitions of Low-Skilled Workers: Evidence From Canada
Abstract | Paper This paper examines how the Workers Income Tax Benefit (WITB) —now called Canada Workers Benefit— and its interaction with the minimum wage affect the labour market transitions for low-skilled workers using Canadian data from 1979 to 2022. Exploiting provincial variation on the maximum real tax credit and real minimum wage rates, I find that higher WITB benefits are associated with lower separation and layoff rates of single-type workers with short job tenure, while the interaction between the WITB and the minimum wage mitigates these effects. Positive effects led by the WITB are found for hiring rates of single-type teenagers, young adults, and recently unemployed people, but the overall impact of the maximum benefits on singles’ transition rate from out-of-the-labour force to in-the-labour force is negative. In contrast, family-type workers reduce their job-to-job transitions and increase their flow from out-of-labour force to in-labour force as the maximum WITB benefits increase. Importantly, the interaction between the two policies negatively affects the hiring rate of this group. Overall, these results indicate that the effects of the interaction between the WITB and the minimum wage counterbalance the direct effects of the WITB, and suggest that WITB benefits are insufficient to cover the associated costs of entering the workforce for some individuals in the target population.