The Decline in Immigrant Entry Earnings : Less Transferable Skills or Lower Ability?

By measuring the earnings growth of immigrant cohorts across the 1960-1980 censuses, we test two potential hypotheses for the decline in the education-adjusted entry earnings of immigrants. One hypothesis suggests that the decline has been caused by the immigration of lower ability immigrants: a result of the relatively unequal income distributions of the source countries currently dominating U.S. immigration. Another hypothesis is that the decline in immigrant entry earnings reflects a change in the extent to which immigrant skills are transferable to the United States. Our cohort analyses provide indirect evidence for the skills transferability hypothesis. We also introduce subsampling techniques that researchers may use to test the sensitivity of cohort-based results to biases caused by sampling error and immigration