Human Capital and the Labor Market Adjustment of Immigrants: Testing Alternative Hypotheses

In previous research on the economic adjustment of immigrants, hypotheses were generated based on the degree of the transferability of skill and the self-selection of immigrants for labor market ability. These hypotheses were found to be consistent with cross-sectional data for the United States and other countries. This chapter considers two alternative hypotheses that have been suggested: selective return migration of immigrants and the migration of those who anticipate high earnings for reasons other than ability. To compare the original and alternative models, a variety of new tests are made using cross-sectional and longitudinal data on earnings, occupation, and schooling from the censuses of population and the National Longitudinal Survey. The model of immigrant adjustment based on skill transferability and immigrant self-selection is shown to be consistent with these new tests, while the alternative hypotheses are not.