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Transferability of Human Capital and Immigrant Assimilation: An Analysis for Germany

  • Basilio, Leilanie


    (Ruhr Graduate School in Economics)

  • Bauer, Thomas K.



This paper investigates the transferability of human capital across countries and the contribution of imperfect human capital portability to the explanation of the immigrant-native wage gap. Using data for West Germany, our results reveal that, overall, education and labor market experience accumulated in the home countries of the immigrants receive significantly lower returns than human capital obtained in Germany. We further find evidence for heterogeneity in the returns to human capital of immigrants across origin countries. Finally, imperfect human capital transferability appears to be a major factor in explaining the wage differential between natives and immigrants.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4716.

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Length: 33 pages
Date of creation: Jan 2010
Date of revision:
Handle: RePEc:iza:izadps:dp4716
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  1. Bauer, Thomas K. & Haisken-DeNew, John P., 2001. "Employer learning and the returns to schooling," Labour Economics, Elsevier, vol. 8(2), pages 161-180, May.
  2. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  3. Friedberg, Rachel M, 2000. "You Can't Take It with You? Immigrant Assimilation and the Portability of Human Capital," Journal of Labor Economics, University of Chicago Press, vol. 18(2), pages 221-51, April.
  4. Fertig, Michael & Schmidt, Christoph M, 2001. "First- and Second-Generation Migrants in Germany - What Do We Know and What Do People Think," CEPR Discussion Papers 2803, C.E.P.R. Discussion Papers.
  5. Sarit Cohen-Goldner & Zvi Eckstein, 2008. "Labor Mobility Of Immigrants: Training, Experience, Language, And Opportunities," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(3), pages 837-872, 08.
  6. Chiswick, Barry R. & Miller, Paul W., 2009. "The international transferability of immigrants' human capital," Economics of Education Review, Elsevier, vol. 28(2), pages 162-169, April.
  7. Korpi, Tomas & Tåhlin, Michael, 2009. "Educational mismatch, wages, and wage growth: Overeducation in Sweden, 1974-2000," Labour Economics, Elsevier, vol. 16(2), pages 183-193, April.
  8. John P. Haisken-DeNew & Markus H. Hahn, 2010. "PanelWhiz - Efficient Data Extraction of Complex Panel Data Sets: An Example Using the German SOEP," Data Documentation 53, DIW Berlin, German Institute for Economic Research.
  9. Martin, Philip L., 2002. "Germany: Managing Migration in the 21st Century," Institute of European Studies, Working Paper Series qt1gb6j203, Institute of European Studies, UC Berkeley.
  10. Bernt Bratsberg & James F. Ragan Jr., 2002. "The Impact of Host-Country Schooling on Earnings: A Study of Male Immigrants in the United States," Journal of Human Resources, University of Wisconsin Press, vol. 37(1), pages 63-105.
  11. Chiswick, Barry R, 1978. "The Effect of Americanization on the Earnings of Foreign-born Men," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 897-921, October.
  12. Esteban Sanromà & Raúl Ramos & Hipólito Simón, 2009. "Immigrant wages in the Spanish labour market: does the origin of human capital matter?," Working Papers 2009/8, Institut d'Economia de Barcelona (IEB).
  13. Joseph Schaafsma & Arthur Sweetman, 2001. "Immigrant earnings: age at immigration matters," Canadian Journal of Economics, Canadian Economics Association, vol. 34(4), pages 1066-1099, November.
  14. Sherrie A. Kossoudji, 1989. "Immigrant Worker Assimilation: Is It a Labor Market Phenomenon?," Journal of Human Resources, University of Wisconsin Press, vol. 24(3), pages 494-527.
  15. Borjas, George J, 1985. "Assimilation, Changes in Cohort Quality, and the Earnings of Immigrants," Journal of Labor Economics, University of Chicago Press, vol. 3(4), pages 463-89, October.
  16. Robert F. Schoeni, 1997. "New Evidence on the Economic Progress of Foreign-Born Men in the 1970s and 1980s," Journal of Human Resources, University of Wisconsin Press, vol. 32(4), pages 683-740.
  17. Duncan, Greg J. & Hoffman, Saul D., 1981. "The incidence and wage effects of overeducation," Economics of Education Review, Elsevier, vol. 1(1), pages 75-86, February.
  18. Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August.
  19. Sanromá, Esteban & Ramos, Raul & Simón, Hipólito, 2008. "The Portability of Human Capital and Immigrant Assimilation: Evidence for Spain," IZA Discussion Papers 3649, Institute for the Study of Labor (IZA).
  20. Schmidt, Christoph M., 1997. "Immigrant performance in Germany: Labor earnings of ethnic German migrants and foreign guest-workers," The Quarterly Review of Economics and Finance, Elsevier, vol. 37(Supplemen), pages 379-397.
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