Revisiting the Family Investment Hypothesis

Abstract

The family investment hypothesis predicts that credit-constrained immigrant families adopt a strategy for financing post-migration human capital investment in which the "primary worker" engages in investment activities and the other partner undertakes activities that finance consumption. Empirical tests of this hypothesis have assumed that the primary worker is the male partner. Many immigrants to Australia are admitted through a "points test" which assigns points for productive skills. Once a principal applicant receives a visa, dependent family members are automatically granted visas as well. Thus, we re-evaluate the family investment hypothesis using principal applicant status to identify primary and secondary workers. Show more