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Why is the payoff to schooling smaller for immigrants?

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  • Chiswick, Barry R.
  • Miller, Paul W.

Abstract

To answer the question, this paper uses the Over-Required-Under Education technique, a new decomposition methodology and data on adult men from the 2000 US Census. Using the 510 three-digit occupational categories, similar patterns emerge whether the mean or mode of education in the occupation is used as the typical (required) level. The partial effect of the occupation's typical schooling level is the same for immigrants and natives. About two thirds of the smaller effect of schooling on earnings is attributable to differences by nativity in the payoffs to over/under education. The remainder is largely due to the different distributions by nativity of over/under education. Favorable immigrant selectivity, especially among the least skilled, and to a lesser extent, limited transferability of foreign schooling, is largely responsible for these patterns. A variety of tests of robustness are performed, including separate analyses for child and adult immigrants.

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Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 15 (2008)
Issue (Month): 6 (December)
Pages: 1317-1340

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Handle: RePEc:eee:labeco:v:15:y:2008:i:6:p:1317-1340

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Web page: http://www.elsevier.com/locate/labeco

Related research

Keywords: I21 J24 J31 J61 F22 Immigrants Schooling Occupations Earnings Rates of return Selectivity;

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References

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  1. Kalena E. Cortes, 2004. "Are Refugees Different from Economic Immigrants? Some Empirical Evidence on the Heterogeneity of Immigrant Groups in the United States," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 465-480, May.
  2. Chiswick, Barry R, 1978. "The Effect of Americanization on the Earnings of Foreign-born Men," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 897-921, October.
  3. Friedberg, Rachel M, 2000. "You Can't Take It with You? Immigrant Assimilation and the Portability of Human Capital," Journal of Labor Economics, University of Chicago Press, vol. 18(2), pages 221-51, April.
  4. Richard Fry & B. Lindsay Lowell, 2003. "The value of bilingualism in the U.S. labor market," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 57(1), pages 128-141, October.
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  6. Cohn, Elchanan & Khan, Shahina P., 1995. "The wage effects of overschooling revisited," Labour Economics, Elsevier, vol. 2(1), pages 67-76, March.
  7. Chiswick, Barry R. & Miller, Paul W., 2007. "The International Transferability of Immigrants’ Human Capital Skills," IZA Discussion Papers 2670, Institute for the Study of Labor (IZA).
  8. Michael Shields & Stephen Wheatley Price, 1998. "The earnings of male immigrants in England: evidence from the quarterly LFS," Applied Economics, Taylor & Francis Journals, vol. 30(9), pages 1157-1168.
  9. Chiswick, Barry R, 1980. "The Earnings of White and Coloured Male Immigrants in Britain," Economica, London School of Economics and Political Science, vol. 47(185), pages 81-87, February.
  10. Daly, Mary C. & Buchel, Felix & Duncan, Greg J., 2000. "Premiums and penalties for surplus and deficit education: Evidence from the United States and Germany," Economics of Education Review, Elsevier, vol. 19(2), pages 169-178, April.
  11. Cortes, Kalena E., 2004. "Are Refugees Different from Economic Immigrants? Some Empirical Evidence on the Heterogeneity of Immigrant Groups in the United States," IZA Discussion Papers 1063, Institute for the Study of Labor (IZA).
  12. Beggs, John J & Chapman, Bruce J, 1988. "Immigrant Wage Adjustment in Australia: Cross Section and Time-Series Estimates," The Economic Record, The Economic Society of Australia, vol. 64(186), pages 161-67, September.
  13. Richard R. Verdugo & Naomi Turner Verdugo, 1989. "The Impact of Surplus Schooling on Earnings: Some Additional Findings," Journal of Human Resources, University of Wisconsin Press, vol. 24(4), pages 629-643.
  14. Dustmann, C, 1993. "Earnings Adjustment of Temporary Migrants," Journal of Population Economics, Springer, vol. 6(2), pages 153-68, May.
  15. Hartog, Joop, 2000. "Over-education and earnings: where are we, where should we go?," Economics of Education Review, Elsevier, vol. 19(2), pages 131-147, April.
  16. Chiswick, Barry R & Miller, Paul W, 1985. "Immigrant Generation and Income in Australia," The Economic Record, The Economic Society of Australia, vol. 61(173), pages 540-53, June.
  17. Guillermina Jasso & Mark Rosensweig & James P. Smith, 2003. "The Earnings of US immigrants," Labor and Demography 0312007, EconWPA.
  18. Baker, Michael & Benjamin, Dwayne, 1994. "The Performance of Immigrants in the Canadian Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 12(3), pages 369-405, July.
  19. Duncan, Greg J. & Hoffman, Saul D., 1981. "The incidence and wage effects of overeducation," Economics of Education Review, Elsevier, vol. 1(1), pages 75-86, February.
  20. Barry Chiswick, 1999. "Are Immigrants Favorably Self-Selected?," American Economic Review, American Economic Association, vol. 89(2), pages 181-185, May.
  21. Chiswick, Barry R., 2003. "Jacob Mincer, Experience and the Distribution of Earnings," IZA Discussion Papers 847, Institute for the Study of Labor (IZA).
  22. Kiker, B. F. & Santos, Maria C. & de Oliveira, M. Mendes, 1997. "Overeducation and undereducation: Evidence for Portugal," Economics of Education Review, Elsevier, vol. 16(2), pages 111-125, April.
  23. Chiswick, Barry R. & Lee, Yew Liang & Miller, Paul W., 2002. "Longitudinal Analysis of Immigrant Occupational Mobility: A Test of the Immigrant Assimilation Hypothesis," IZA Discussion Papers 452, Institute for the Study of Labor (IZA).
  24. Rumberger, Russell W., 1981. "The rising incidence of overeducation in the U.S. Labor market," Economics of Education Review, Elsevier, vol. 1(3), pages 293-314, June.
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