Investment and interruption: effects of the US experience on the earnings of return migrants in Mexico

Migration is widely viewed as an investment in human capital. However, due to the imperfect transferability of skills and knowledge across countries, migration trips are also career interruptions, especially for return migrants who may meanwhile experience depreciation of home country-specific skills. This article demonstrates that migration experience increases return migrants’ earnings in the home country on the condition that the migration stay is sufficiently long and mostly uninterrupted. Employing the revised human capital earnings function, the empirical study shows that only a barely interrupted US experience longer than five years, regardless of the legal status of the migration trips, predicts higher earnings of male return migrants in Mexico than comparable non-migrants. Robust findings emerge controlling for unobserved individual \]acteristics or using instrumental variables to deal with the self-selection and endogeneity. Short migration stays in the US and frequent traveling provide return migrants no wage premium in Mexico.