Returns to Immigrants’ Foreign Education: Assessing Origin-Country Transferability and Quality across Fifteen European Destination Countries

Andrey Tibajev , Institute for Futures Studies
Agnieszka Kanas, Erasmus University Rotterdam

The devaluation of immigrants’ foreign education in domestic labour markets is well established, yet the reasons behind it remain insufficiently understood. This paper tests and contrasts two leading explanations: transferability, which emphasises institutional, cultural, and linguistic differences that hinder the portability of skills across borders, and quality, which attributes lower returns to variation in actual knowledge and skills at a given educational level. A key challenge is that these explanations overlap empirically, as origin countries with low transferability to Europe also tend to have lower educational quality, making the two explanations difficult to isolate. Using the 2021 EU Labour Force Survey, we analyse 19,565 immigrants across fifteen European destination countries, assessing the transferability and quality of education from 168 origin countries. This multiple-destination and multiple-origin design enables us to disentangle the two explanations and examine their interaction. We estimate labour market returns with a destination-country fixed-effects regression, modelling occupational status with a three-way interaction between individual years of education and origin-country transferability and quality. Our findings reveal a compensatory relationship between the two explanations. Immigrants achieve higher returns to their foreign education if they come from a country that is either institutionally, culturally, or linguistically similar, aiding transferability, or from one with high educational spending, improving quality. Returns to education do not increase when both transferability and quality are high, but fall substantially when both are low. These results advance integration and stratification theory by showing that transferability and quality operate as substitutes in shaping educational returns.

See extended abstract

 Presented in Session 19. The Labor-Market Outcomes of Migrant Populations