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Migration and Human Capital

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Abstract

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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Keywords: Migration; human capital; economic growth.;

Find related papers by JEL classification:

  • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
  • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
  • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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  1. 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.
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  8. Robert J. LaLonde & Robert H. Topel, 1989. "Labor Market Adjustments to Increased Immigration," University of Chicago - George G. Stigler Center for Study of Economy and State 55, Chicago - Center for Study of Economy and State.
  9. Guillermina Jasso & Mark Rosensweig & James P. Smith, 2003. "The Earnings of US immigrants," Labor and Demography 0312007, EconWPA.
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  11. 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.
  12. 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..
  13. David Card, 1996. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," Working Papers 747, Princeton University, Department of Economics, Industrial Relations Section..
  14. 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.
  15. 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.
  16. George J. Borjas, 1987. "Self-Selection and the Earnings of Immigrants," NBER Working Papers 2248, National Bureau of Economic Research, Inc.
  17. George J. Borjas, 1992. "The Intergenerational Mobility of Immigrants," NBER Working Papers 3972, National Bureau of Economic Research, Inc.
  18. John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade, and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1, January.
  19. 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.
  20. Borjas, George J, 1992. "Ethnic Capital and Intergenerational Mobility," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 123-50, February.
  21. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
  22. 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.
  23. 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.
  24. Katz, Eliakim & Stark, Oded, 1987. "International Migration under Asymmetric Information," Economic Journal, Royal Economic Society, vol. 97(387), pages 718-26, September.
  25. 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.
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