Quantitative Analysis on Immigrants ’ Self-Selection and its Implications

In this paper I investigate the interaction between human capital accumulation and labor mobility across countries. To this end, I build a model economy with two locations populated by households that take decisions on migration and their level of human capital. I find that in most of the cases investment in human capital is higher in a world where households can migrate from one location to another one than in a world where they cannot. In my model economy there is positive or negative self selection depending on: differences in TFP between both economies, a pecuniary migration cost and a time migration cost that affects the effective units of labor. Finally, I contrast quantitative implications of the model with the data. I take three cases: immigrants from Mexico, India and UK to US. For each case the model is able to generate average years of schooling for immigrants and natives and relative earnings of immigrants with respect to US born-natives