The influence of measurement error and unobserved heterogeneity in estimating immigrant returns to foreign and host-country sources of human capital

Studies which estimate separate returns to foreign and host-country sources of human capital have burgeoned in the immigration literature in recent years. In estimating separate returns, analysts are typically forced to make strong assumptions about the timing and exogeneity of human capital investments. Using a particularly rich longitudinal Canadian data source, we consider to what extent the findings of this literature may be driven by biases arising from errors in measuring foreign and host-country sources of human capital and the endogeneity of post-migration schooling and work experience. Our main finding is that the results of the current literature by and large do not appear to be driven by the assumptions needed to estimate separate returns using the standard data sources available. Copyright Springer-Verlag 2012