Migration and Human Capital Formation: Theory and Evidence from the U.S. High School Movement, Issues 2002-2123
In 1910, 12 percent of American 14-17 year olds were enrolled in high school; by 1930, enrollment had increased to 50 percent; enrollment in Britain was 12 percent in 1950. This paper argues that by increasing the skill premium, the massive inflows of European unskilled immigrants at the turn of the twentieth century engendered America's sharp rise in human capital investment. The increased enrollments raised the supply of schools, leading to continued schooling investment. Cross section evidence and a VAR analysis of the time series data support the hypothesized role of immigration in generating the high school movement.
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Time Series Evidence
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capita wealth cointegrating vector column compulsory schooling laws correlation cost of schooling Descriptive Statistics East South Central education expenditures education gap educational attainment equation equilibrium errors in parenthesis exogenous expenditures per pupil Goldin and Katz growth in attainment growth of immigration growth rate high school attainment high school graduates high school movement influx of unskilled invest in education lags level of attainment long-run relationship male attainment migrants is associated migration's impact number of high number of migrants omitted variable bias Overall Overall p-values in brackets percent level percentage point increase percentage point rise point estimates population movements positively associated private cost proxy pupil expenditures regression relative factor prices return to education schooling costs schooling expenditures schooling investment series evidence short-run significant skill premium skilled labor skilled sector social capital South Central standard deviation increase Standard errors suggests sunk cost Table theory unskilled labor unskilled sector wealth level