Are Immigrants Assimilating Better Now than A Decade Ago?

Are Immigrants Assimilating Better Now than A Decade Ago?: The Case of Hong Kong In this study we use census data to analyze the change in earnings differential between new immigrants from China and natives of Hong Kong over time. Our study shows that the quality of the cohort of new male immigrants immigrating into Hong Kong after the abolition of the "touch-base" policy in 1981 has been increasing steadily over time, both in terms of their endowment in schooling and experience, and in terms of their innate ability. However, the difference in rate of return to schooling and experience between immigrants and natives is widening at the same time to such an extent that from 1986 to 1991, the earnings disadvantage of new immigrants increases. The decrease in the rate of return to human capital investment of the male immigrants relative to the natives is attributed to the rapid restructuring of the Hong Kong economy in the 1980s. The expanding service industries, which provide most of the employment in the economy, require more country-specific human capital for production than the declining manufacturing industries. A large portion of the human capital of immigrants acquired in mainland China has to be written off when they join the service sector. Consequently new immigrants in the 1990s will have greater difficulties assimilating into the Hong Kong economy.