A Historical Note on the Assimilation Rates of Foreign-Born Men and Women in the United States

The 1924 Immigration Act excluded immigrants from economically developing countries to the point of their near total exclusion. Forty years later, the 1965 Immigration and Nationality Act eliminated most discriminatory county-of-origin barriers. America’s doors opened and immigration from economically developing countries soared. Fueling debates about the “quality” of immigrants from economically developing countries, empirical studies based on a well-respected methodology conclude that post-1965 immigrant men have low initial earnings and sluggish earnings growth. This methodology is based on flawed assumptions. Removing these assumptions reveals high earnings growth for post-1965 immigrant men in accordance with the Immigrant Human Capital Investment (IHCI) model. A similar story emerges for immigrant women, contradicting the Family Investment Hypothesis (FIH) first put forth by Long and Duleep and Sanders. It appears a pre-1965/post-1965 transition occurred in the earnings profiles of US immigrants, from earnings resembling those of US natives to low initial earnings but much higher earnings growth than their US-born statistical twins. The transition underlies the overtime success story of immigrant families from economically developing countries; the high earnings growth reflects human capital investment that invigorates the economy.