IZA DP No. 476: Human Capital versus Social Capital: A Comparative Analysis of Immigrant Wages and Labor Market Incorporation in Japan and the United States
published in: Migraciones Internacionales, 2004, 2 (1), 5-35
The most commonly used model of labor market incorporation among immigrants in the
United States analyzes their earnings largely as a function of human capital variables such
as education, language competence, age, length of residence and employment experience in
the receiving country. However, such a simple model is not necessarily cross-culturally
applicable and may lose much of its explanatory power in other societies, where immigrants
encounter different labor market conditions. This paper estimates multivariate models of
wage determination among samples of foreign workers interviewed in 1996 in San Diego
County, California, and the Japanese industrial city of Hamamatsu. In contrast to San Diego,
the standard measures of achieved human capital do not significantly influence immigrant
wages in Hamamatsu. Instead, ascribed human capital (e.g., gender, ethnicity) has a much
greater impact on immigrant wages in Japan than in the United States. Although the use of
social networks by immigrants to find jobs has a significant impact on wages in both
countries, the effect is positive in Hamamatsu, whereas it is negative in San Diego. The
paper draws on data from ethnographic studies in Japan and California to suggest
explanations for these divergent results. More generally, the paper illustrates the importance
of reception contexts (host societies) in determining labor market outcomes for immigrant
workers.
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