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Undergraduate Economic Review

Abstract

While immigrants in the United States tend to earn less than comparable natives, their children close the earnings gap. The purpose of this study is to determine how differences in intergenerational transfer of human capital between immigrant families and native families affect different earning outcomes for respondents of each group. Specifically, this study uses a human capital framework to analyze both the direct effect of parental education on respondent earnings and the indirect effect on earnings by first affecting respondent education, which in turn affects respondent earnings. Data from the 1979 National Longitudinal Survey of Youth allows background variables within a family from 1979 to be related to respondent earnings in 2006. Thus, human capital investments made by parents can be linked to respondent outcomes several years later. The analysis shows that while parental education is a strong predictor of respondent education and earnings in the native population, it is weaker for second generation immigrants. Perhaps second generation immigrants overcome deficiencies in their parents’ human capital through higher levels of motivation.

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