Lifecycle Human Capital Accumulation Across Countries: Lessons From U.S. Immigrants

Does lifecycle human capital accumulation vary across countries? If so, why? This paper seeks to answer these questions by studying U.S. immigrants, who come from a wide variety of countries but work in a common labor market. We document that returns to potential experience among U.S. immigrants are higher on average for workers coming from rich countries than for those coming from poor countries. To understand this fact we build a Ben-Porath model of lifecycle human capital accumulation that features three potential theories, working respectively through cross-country differences in: selection, skill loss, and human capital accumulation. To distinguish between theories, we use new data on the characteristics of immigrants and non-migrants in a large set of countries. We conclude that the most likely theory is that immigrants from poor countries accumulate relatively less human capital in their home countries before migrating. Our data suggest that lower quality schooling in poor countries may be the proximate cause of their workers’ lower lifecycle human capital accumulation.