Individualism and the Formation of Human Capital
Katharina Hartinger, Sven Resnjanskij, Jens Ruhose, Simon Wiederhold
Journal of the European Economic Association,
forthcoming
Abstract
There is an ongoing debate about the economic effects of individualism. We establish that individualism leads to better educational and labor market outcomes. Using data from the largest international adult skill assessment, we identify the effects of individualism by exploiting variation between migrants at the origin country, origin language, and person level. Migrants from more individualistic cultures have higher cognitive skills and larger skill gains over time. They also invest more in their skills over the life-cycle, as they acquire more years of schooling and are more likely to participate in adult education activities. In fact, individualism is more important in explaining adult skill formation than any other cultural trait that has been emphasized in previous literature. In the labor market, more individualistic migrants earn higher wages and are less often unemployed. We show that our results cannot be explained by selective migration or omitted origin-country variables.
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Halle Institute for Economic Research
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Why Is the Roy-Borjas Model Unable to Predict International Migrant Selection on Education? Evidence from Urban and Rural Mexico
Stefan Leopold, Jens Ruhose, Simon Wiederhold
World Economy,
Vol. 48 (2),
2025
Abstract
The Roy-Borjas model predicts that international migrants are less educated than nonmigrants because the returns to education are generally higher in developing (migrant-sending) than in developed (migrant-receiving) countries. However, empirical evidence often shows the opposite. Using the case of Mexico-U.S. migration, we show that this inconsistency between predictions and empirical evidence can be resolved when the human capital of migrants is assessed using a two-dimensional measure of occupational skills rather than by educational attainment. Thus, focusing on a single skill dimension when investigating migrant selection can lead to misleading conclusions about the underlying economic incentives and behavioral models of migration.
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IWH-DPE in a Nutshell
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East Germany
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Teaching Within the framework of its cooperations with both German and foreign universities IWH researchers are actively committed to teaching by offering academic courses. These…
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