Are shocks to human capital composition permanent? Evidence from the Mariel boatlift

We examine whether shocks to a city’s average level of human capital are associated with persistent or permanent changes in human capital. The Mariel boatlift of 1980 represents an exogenous negative shock to Miami’s average human capital because it attracted a particularly low-skilled mix of immigrants. To assess whether the boatlift affected Miami’s future human capital accumulation, we construct a synthetic control group to analyze the effect of this shock. The results suggest that the Miami metropolitan area experienced slower increases in average human capital than its synthetic control city after the boatlift. This result is robust to alternative estimation strategies, data sets, and alternative hypotheses. The result implies that a decreased level of average skills tends to subsequently attract unskilled skilled workers more strongly than skilled workers, at least in the context of immigration shocks. We discuss plausible mechanisms for this finding and place the findings into the context of the spatial equilibrium model.