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The Immigrant Human Capital Investment Model

In: Human Capital Investment

Author

Listed:
  • Harriet Duleep

    (William & Mary)

  • Mark C. Regets

    (National Foundation for American Policy)

  • Seth Sanders

    (Cornell University)

  • Phanindra V. Wunnava

    (Middlebury College)

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.

Suggested Citation

  • Harriet Duleep & Mark C. Regets & Seth Sanders & Phanindra V. Wunnava, 2020. "The Immigrant Human Capital Investment Model," Springer Books, in: Human Capital Investment, chapter 0, pages 37-43, Springer.
    • Handle: RePEc:spr:sprchp:978-3-030-47083-8_4
    DOI: 10.1007/978-3-030-47083-8_4
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