Immigrant Skill Transferability and the Propensity to Invest in Human Capital

As immigrants live, learn, and earn in the US, the earnings of comparably educated immigrants converge regardless of their country or admission status. Indeed, controlling for initial human capital levels, there is an inverse relationship between immigrant entry earnings and earnings growth. Immigrants initially lacking transferable skills have lower initial earnings but a higher propensity to invest in human capital than natives or high-skill-transferability immigrants. Policies that bring in immigrants lacking immediately transferable skills, such as family-based admission policies, may provide an infusion of undervalued flexible human capital that facilitates innovation and entrepreneurship. Low-skill-transferability immigration may foster the development of immigrant employment that is distinct from native-born employment and possibly reduce employment competition with natives. Those who enter without immediately transferable skills are more likely to be permanent and permanence confers a variety of societal benefits. Because human capital that is not valued in the host-country's labor market is still useful for learning new skills, immigrants who initially lack transferable skills provide the host country an undervalued, highly malleable resource that may promote a vibrant economy in the long run.