The Immigrant Human Capital Investment Model

Harriet Duleep (), Mark C. Regets (), Seth Sanders () and Phanindra V. Wunnava ()
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Harriet Duleep: William & Mary
Mark C. Regets: National Foundation for American Policy
Seth Sanders: Cornell University
Phanindra V. Wunnava: Middlebury College

Chapter Chapter 4 in Human Capital Investment, 2020, pp 37-43 from Springer

Abstract: Abstract Immigrants arrive with human capital accumulated in their source country. To bring this to life, immigrants invest in host-country specific forms of human capital such as learning English and becoming familiar with the host country’s institutions, production methods, and technical terms. As host country-specific skills are gained, the labor-market value of source-country human capital increases, and earnings increase. Immigrants with high source-country human capital but low skill transferability have the largest incentives to invest in U.S.-specific skills, as earnings and thus the opportunity cost of investment is low at arrival and the return to investment high. Holding source-country human capital constant, immigrants with high transferability have less of an incentive to invest in new U.S.-specific human capital. Thus, the IHCI model suggests an inverse relationship between entry earnings and earnings growth and implies that entry earnings cannot measure an immigrant’s level of source-country human capital.

Date: 2020
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DOI: 10.1007/978-3-030-47083-8_4

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