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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 () (Bar-Ilan University)
Chemi Gotlibovski () (Academic College of Tel-Aviv Yaffo)
Nava Kahana () (Bar-Ilan University and IZA Bonn)

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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 creditconstrained 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 nondecreasing 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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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2308.

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Length: 23 pages
Date of creation: Sep 2006
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Handle: RePEc:iza:izadps:dp2308

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Related research
Keywords: human capital investment; immigrants; marriage; binding liquidity constraints;

Other versions of this item:

Find related papers by JEL classification:
D10 - Microeconomics - - Household Behavior - - - General
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers

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  1. 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. [Downloadable!]
  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. [Downloadable!] (restricted)
  3. Cobb-Clark, Deborah & Crossley, Thomas F., 2004. "Revisiting the family investment hypothesis," Labour Economics, Elsevier, vol. 11(3), pages 373-393, June. [Downloadable!] (restricted)
    Other versions:
  4. 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. [Downloadable!] (restricted)
    Other versions:
  5. Harriet Orcutt Duleep & Mark C. Regets, 1999. "Immigrants and Human-Capital Investment," American Economic Review, American Economic Association, vol. 89(2), pages 186-191, May. [Downloadable!] (restricted)
  6. 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. [Downloadable!] (restricted)
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  7. 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. [Downloadable!] (restricted)
  8. Bernhardt, Dan & Backus, David, 1990. "Borrowing Constraints, Occupational Choice, and Labor Supply," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 145-73, January. [Downloadable!] (restricted)
  9. Christopher Worswick, 1996. "Immigrant Families in the Canadian Labour Market," Canadian Public Policy, University of Toronto Press, vol. 22(4), pages 378-396, December. [Downloadable!] (restricted)
  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. [Downloadable!] (restricted)
  11. M. Browning & P. A. Chiappori, 1998. "Efficient Intra-Household Allocations: A General Characterization and Empirical Tests," Econometrica, Econometric Society, vol. 66(6), pages 1241-1278, November.
    Other versions:
  12. Weiss, Y., 1992. "The Formation and Dissolution of Families: Why Marry? Who Marries Whom ? and What Happens Upon Marriage and Divorce," University of Chicago - Economics Research Center 92-7, Chicago - Economics Research Center.
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  13. Harriet Duleep & Seth Sanders, 1993. "The decision to work by married immigrant women," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 46(4), pages 677-690, July.
  14. Long, James E, 1980. "The Effect of Americanization on Earnings: Some Evidence for Women," Journal of Political Economy, University of Chicago Press, vol. 88(3), pages 620-29, June. [Downloadable!] (restricted)
  15. Worswick, C., 1996. "Immigrant Families in Canadian labour Market," Department of Economics - Working Papers Series 504, The University of Melbourne.
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