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Human Capital and Labor Supply Decisions in Immigrant Families: An Alternative Test of the Family Investment Hypothesis

Author

Listed:
  • Sarit Cohen Goldner

    (Department of Economics, Bar Ilan University, Ramat Gan 5290002, Israel)

  • Chemi Gotlibovski

    (Department of Economics, The Academic College of Tel Aviv-Yaffo, 2 Rabenu Yeruham st., Tel-Aviv 86162, Israel)

  • Nava Kahana

    (Department of Economics, Bar Ilan University, Ramat Gan 5290002, Israel)

Abstract

Immigrant households frequently face liquidity constraints upon arrival, which potentially hinders their long-term economic integration. The Family Investment Hypothesis (FIH) suggests that couples may respond to these constraints by coordinating their labor supply: one spouse works to finance the other’s investment in local human capital. Previous studies have tested the FIH by comparing married immigrants to married natives, attributing differences in outcomes to financial constraints. However, this approach may conflate such constraints with other inherent differences between immigrants and natives. This paper introduces a novel identification strategy that compares the differences in labor market outcomes of married and single immigrants to those of their native-born counterparts, allowing for better isolation of the effects of liquidity. Applying this strategy to repeated cross-sectional data on immigrants from the Former Soviet Union who arrived in Israel during the 1990s, the analysis finds no supporting evidence for the FIH. One possible explanation for this finding is the substantial government support extended to these immigrants, which may have mitigated their financial constraints. Alternatively, the results may indicate that immigrant households do not systematically adjust their labor supply in accordance with the FIH framework. These findings highlight the importance of the institutional context in shaping household labor supply decisions.

Suggested Citation

  • Sarit Cohen Goldner & Chemi Gotlibovski & Nava Kahana, 2025. "Human Capital and Labor Supply Decisions in Immigrant Families: An Alternative Test of the Family Investment Hypothesis," Economies, MDPI, vol. 13(8), pages 1-20, July.
    • Handle: RePEc:gam:jecomi:v:13:y:2025:i:8:p:211-:d:1707697
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    References listed on IDEAS

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    1. 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.
    2. Sarit Cohen-Goldner & Chemi Gotlibovski & Nava Kahana, 2009. "The role of marriage in immigrants’ human capital investment under liquidity constraints," Journal of Population Economics, Springer;European Society for Population Economics, vol. 22(4), pages 983-1003, October.
    3. Ana Ferrer & Yazhuo (Annie) Pan & Tammy Schirle, 2023. "The Work Trajectories of Married Canadian Immigrant Women, 2006–2019," Journal of International Migration and Integration, Springer, vol. 24(3), pages 697-716, December.
    4. Bernhardt, Dan & Backus, David, 1990. "Borrowing Constraints, Occupational Choice, and Labor Supply," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 145-173, January.
    5. Cohen Goldner, Sarit & Eckstein, Zvi & Weiss, Yoram, 2012. "Immigration and Labor Market Mobility in Israel, 1990 to 2009," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262017679, December.
    6. Al?cia Adser? & Ana M. Ferrer, 2014. "The Myth of Immigrant Women as Secondary Workers: Evidence from Canada," American Economic Review, American Economic Association, vol. 104(5), pages 360-364, May.
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