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Migration and Human Capital

International migration can be viewed as a natural experiment, placing a worker into a different economic environment while holding his human capital endowment fixed. Migration data therefore provide an opportunity to learn not only about the economic forces underlying migration, but also about the nature of human capital. Existing migration theories have not taken advantage of this opportunity. Instead of developing a framework capable of accounting for a broad range of observations, the literature has studied individual observations, such as migrant selectivity or assimilation rates, largely in isolation. A variety of separate theories has been proposed, based on assumptions that are not always mutually consistent. This paper makes a step towards a unified theory of migration. We develop a set of stylized facts characterizing immigrant earnings histories and show how a model of human capital can provide a coherent explanation for these observations. In contrast to most of the literature, we do not assume that unobserved primitives, such as preferences or technologies, differ across countries. In particular, cross-country wage differentials arise endogenously as a feature of labor market equilibrium. Since explaining immigrant earnings is of primary interest, this is an important innovation.

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Paper provided by Arizona State University, Department of Economics in its series Working Papers with number 97/6.

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Handle: RePEc:wop:astewp:9706
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  1. George J. Borjas, 1994. "Ethnicity, Neighborhoods, and Human Capital Externalities," NBER Working Papers 4912, National Bureau of Economic Research, Inc.
  2. Joseph Altonji & David Card, 1989. "The Effects of Immigration on the Labor Market Outcome of Less-Skilled Natives," Working Papers 636, Princeton University, Department of Economics, Industrial Relations Section..
  3. George J. Borjas, 1992. "The Intergenerational Mobility of Immigrants," NBER Working Papers 3972, National Bureau of Economic Research, Inc.
  4. George J. Borjas & Richard B. Friedman & Lawrence F. Katz, 1997. "How Much Do Immigration and Trade Affect Labor Market Outcomes?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 1-90.
  5. Hanushek, Eric A, 1986. "The Economics of Schooling: Production and Efficiency in Public Schools," Journal of Economic Literature, American Economic Association, vol. 24(3), pages 1141-77, September.
  6. Geoffrey Carliner, 1996. "The Wages and Language Skills of U.S. Immigrants," NBER Working Papers 5763, National Bureau of Economic Research, Inc.
  7. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-61, September.
  8. George J. Borjas, 1987. "Self-Selection and the Earnings of Immigrants," NBER Working Papers 2248, National Bureau of Economic Research, Inc.
  9. Gang, Ira & Zimmermann, Klaus F, 1996. "Is Child Like Parent? Educational Attainment and Ethnic Origin," CEPR Discussion Papers 1461, C.E.P.R. Discussion Papers.
  10. Borjas, George J & Bratsberg, Bernt, 1996. "Who Leaves? The Outmigration of the Foreign-Born," The Review of Economics and Statistics, MIT Press, vol. 78(1), pages 165-76, February.
  11. Rachel M. Friedberg, 1996. "You Can't Take It With You? Immigrant Assimilation and the Portability of Human Capital," NBER Working Papers 5837, National Bureau of Economic Research, Inc.
  12. David Card, 1997. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," NBER Working Papers 5927, National Bureau of Economic Research, Inc.
  13. Stark, Oded, 1995. " Return and Dynamics: The Path of Labor Migration When Workers Differ in Their Skills and Information Is Asymmetric," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(1), pages 55-71, March.
  14. Robert J. LaLonde & Robert H. Topel, 1991. "Labor Market Adjustments to Increased Immigration," NBER Chapters, in: Immigration, Trade, and the Labor Market, pages 167-199 National Bureau of Economic Research, Inc.
  15. Katz, Eliakim & Stark, Oded, 1987. "International Migration under Asymmetric Information," Economic Journal, Royal Economic Society, vol. 97(387), pages 718-26, September.
  16. Fairlie, Robert, 2014. "Ethnic and Racial Self-Employment Differences and Possible Explanations," Santa Cruz Department of Economics, Working Paper Series qt24p7v6gc, Department of Economics, UC Santa Cruz.
  17. Joseph G. Altonji & David Card, 1989. "The Effects of Immigration on the Labor Market Outcomes of Natives," NBER Working Papers 3123, National Bureau of Economic Research, Inc.
  18. Carrington, William J & Detragiache, Enrica & Vishwanath, Tara, 1996. "Migration with Endogenous Moving Costs," American Economic Review, American Economic Association, vol. 86(4), pages 909-30, September.
  19. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
  20. John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade, and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1, October.
  21. Christian Dustmann, 1996. "An Economic Analysis of Return Migration," Discussion Papers 96-02 ISSN 1350-6722, University College London, Department of Economics.
  22. Bartel, Ann P, 1989. "Where Do the New U.S. Immigrants Live?," Journal of Labor Economics, University of Chicago Press, vol. 7(4), pages 371-91, October.
  23. Chiswick, Barry R, 1988. "Differences in Education and Earnings across Racial and Ethnic Groups: Tastes, Discrimination, and Investments in Child Quality," The Quarterly Journal of Economics, MIT Press, vol. 103(3), pages 571-97, August.
  24. Borjas, George J, 1992. "Ethnic Capital and Intergenerational Mobility," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 123-50, February.
  25. Guillermina Jasso & Mark Rosensweig & James P. Smith, 2003. "The Earnings of US immigrants," Labor and Demography 0312007, EconWPA.
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