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The role of marriage in immigrants’ human capital investment under liquidity constraints

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Author Info

  • Sarit Cohen-Goldner
  • Chemi Gotlibovski
  • Nava Kahana

    ()

Abstract

This paper presents a two-period human capital investment model of married and single immigrants under binding liquidity constraints, which explains alternative patterns in the host country's labor market. These patterns are also compared to those of natives who face a perfect capital market. By extending Eckstein and Weiss’ model (2004) from the case of single immigrants with accessibility to a perfect capital market to the case of credit-constrained immigrant families, it is shown that the comparative advantage in investment that determines which spouse will invest more in local skills depends on his/her imported human capital growth rate rather than on its level. This comparative advantage can lead to full or partial specialization in work and investment activities within immigrant households. However, the level invested by each spouse is non-increasing with the level of the imported human capital of the spouse with the comparative advantage in investment, whereas it is non-decreasing with the level of imported human capital of the other spouse. A comparison of pre and post marriage investment indicates that the spouse with the comparative advantage in investment will increase his/her investment in human capital after his/her marriage, whereas the other spouse will decrease it. The more efficient investment due to marriage enables the achievement of a Pareto improvement.

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Bibliographic Info

Article provided by Springer in its journal Journal of Population Economics.

Volume (Year): 22 (2009)
Issue (Month): 4 (October)
Pages: 983-1003

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Handle: RePEc:spr:jopoec:v:22:y:2009:i:4:p:983-1003

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Related research

Keywords: Human capital investment; Immigrants; Marriage; Binding liquidity constraints; D10; J24; J61;

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References

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  1. Charles M. Beach & Christopher Worswick, 1993. "Is There a Double-Negative Effect on the Earnings of Immigrant Women?," Canadian Public Policy, University of Toronto Press, vol. 19(1), pages 36-53, March.
  2. Baker, Michael & Benjamin, Dwayne, 1997. "The Role of the Family in Immigrants' Labor-Market Activity: An Evaluation of Alternative Explanations," American Economic Review, American Economic Association, vol. 87(4), pages 705-27, September.
  3. Mark C. Regets & Harriet Orcutt Duleep, 1999. "Immigrants and Human-Capital Investment," American Economic Review, American Economic Association, vol. 89(2), pages 186-191, May.
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  10. Christopher Worswick, 1999. "Credit Constraints and the Labour Supply of Immigrant Families in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 32(1), pages 152-170, February.
  11. Francine D. Blau & Lawrence M. Kahn & Joan Y. Moriarty & Andre Portela Souza, 2003. "The Role of the Family in Immigrants' Labor-Market Activity: An Evaluation of Alternative Explanations: Comment," American Economic Review, American Economic Association, vol. 93(1), pages 429-447, March.
  12. Blinder, Alan S & Weiss, Yoram, 1976. "Human Capital and Labor Supply: A Synthesis," Journal of Political Economy, University of Chicago Press, vol. 84(3), pages 449-72, June.
  13. Harriet Duleep & Seth Sanders, 1993. "The decision to work by married immigrant women," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 46(4), pages 677-690, July.
  14. Worswick, C., 1996. "Immigrant Families in Canadian labour Market," Department of Economics - Working Papers Series 504, The University of Melbourne.
  15. Francine D. Blau & Lawrence M. Kahn & Joan Y. Moriarty & Andre Portela Souza, 2002. "The Role of the Family in Immigrants' Labor-Market Activity: Evidence from the United States," NBER Working Papers 9051, National Bureau of Economic Research, Inc.
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