Citizenship acquisition, employment prospects and earnings

The aim of this paper is thus to analyse the citizenhip effect on both employment probabilities and the relative income of work of immigrants in two countries, Canada and Sweden...Both Canada and Sweden have relatively high levels of immigrant intake--the foreign-born population in Canada is abuot one in five (21 percent) whereas in Sweden is about one in six (14 percent). Moreover, both countries have a large set of policies related to enhancing the integration of immigrants (MIPEX 2011). And both Canada and Sweden have comprehensive datasets that allow us to explore these issues...
In contrast to Scott (2008), with the exception of Scandinavian immigrants in Sweden we find that citizenship acquisition has a positive impact on employment for all immigrant groups...The size of the co-ethnic population has a positive impact for many immigrant groups...The results for earnings are similar. Citizenship acquisition has a positive and significant effect on earnings for immigrants in both Canada and Sweden...
So, in a country where the barriers to non-citizens are relatively few (i.e. non-citizens have access to most of the jobs and most of the rights of citizens, both social and legal), why might citizenship help in employment and earnings prospects? Spence (1973) argues that observable characteristics act as signals to employers about the potential risk of hiring new employees. Within this context, citizenship may act as a signal to employers about an immigrant's commitment to remaining in the host country...
Our content is that given citizenship's apparent link to improved employment and earnings prospects, tightening up citizenship regulations may result in decreased opportunities for immigrants in receiving countries. This means, in turn, that stricter citizenship regulations could have the effect of actually increasing social welfare costs--an effect neither intended nor desirable.
 
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