Brazilian Review of Econometrics V 33, N 1, 2014

Juliano Assunção, Leandro Siqueira Carvalho.

The Roy model predicts that migrants will be disproportionately drawn from the lower

half of the educational distribution of the sending country if the sending country has

a higher return to schooling. However, Mexican immigrants in the U.S. tend to be

disproportionately drawn from the middle of the distribution. We argue that nancial

constraints may explain why. We study migrants' selectivity when agents that face credit

constraints make joint decisions about how much to invest in education and whether

to migrate. Our results show that nancial constraints can explain the intermediate

selection of migrants observed in the data.