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The Wage Premium of Foreign Education: New Evidence from Australia

  • Chan, Gavin

    (Macquarie University, Sydney)

  • Heaton, Christopher

    ()

    (Macquarie University, Sydney)

  • Tani, Massimiliano

    ()

    (IZA)

We study whether Australian employers recognise immigrants' education acquired abroad, and if so how. Using data from the Longitudinal Surveys of Immigrants in Australia, we apply interval regression to model migrant hourly earnings. We find substantially higher returns from human capital obtained in Australia and other OECD countries compared with non-OECD countries. These results suggest that the transfer of human capital acquired abroad is mediated by the country in which it was acquired, as found for Israel (Friedberg (2000) and the US (Bratsberg and Ragan (2002)). The results also suggest that immigrants from non-OECD countries are the ones who can gain the most from obtaining further education in Australia, and that targeted rather than generic policies in this area could reduce the extent of the education-occupation mismatch amongst immigrants.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6578.

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Length: 21 pages
Date of creation: May 2012
Date of revision:
Publication status: published in Australian Economic Review, 2013, 46(4), 395-404
Handle: RePEc:iza:izadps:dp6578
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  1. Chiswick, Barry R. & Miller, Paul W., 2011. "Negative and Positive Assimilation, Skill Transferability, and Linguistic Distance," IZA Discussion Papers 5420, Institute for the Study of Labor (IZA).
  2. Parvinder Kler, 2005. "Graduate overeducation in Australia: A comparison of the mean and objective methods," Education Economics, Taylor & Francis Journals, vol. 13(1), pages 47-72.
  3. Barry R. Chiswick & Yew Liang Lee & Paul W. Miller, 2005. "Immigrant Earnings: A Longitudinal Analysis," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 51(4), pages 485-503, December.
  4. 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.
  5. Matloob Piracha & Massimiliano Tani & Florin Vadean, 2010. "Immigrant Over- and Under-education: The Role of Home Country Labour Market Experience," CEIS Research Paper 175, Tor Vergata University, CEIS, revised 09 Dec 2010.
  6. Chiswick, Barry R. & Miller, Paul W., 1994. "The determinants of post-immigration investments in education," Economics of Education Review, Elsevier, vol. 13(2), pages 163-177, June.
  7. Ana Ferrer & W. Craig Riddell, 2008. "Education, credentials, and immigrant earnings," Canadian Journal of Economics, Canadian Economics Association, vol. 41(1), pages 186-216, February.
  8. Battu, Harminder & Sloane, Peter J., 2002. "Overeducation and Ethnic Minorities in Britain," IZA Discussion Papers 650, Institute for the Study of Labor (IZA).
  9. Preston, Alison, 1997. "Where Are We Now with Human Capital Theory in Australia?," The Economic Record, The Economic Society of Australia, vol. 73(220), pages 51-78, March.
  10. Chiswick, Barry R. & Miller, Paul W., 2004. "Language Skills and Immigrant Adjustment: What Immigration Policy Can Do!," IZA Discussion Papers 1419, Institute for the Study of Labor (IZA).
  11. Jaai Parasnis & Dietrich Fausten & Roland Cheo, 2008. "Do Australian Qualifications Help? The Effect of Host Country Qualification on Migrant Participation and Unemployment," The Economic Record, The Economic Society of Australia, vol. 84(s1), pages S131-S140, 09.
  12. Chiswick, Barry R & Miller, Paul W, 1985. "Immigrant Generation and Income in Australia," The Economic Record, The Economic Society of Australia, vol. 61(173), pages 540-53, June.
  13. Parvinder Kler, 2007. "A panel data investigation into over-education among tertiary educated Australian immigrants," Journal of Economic Studies, Emerald Group Publishing, vol. 34(3), pages 179-193, September.
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