When human capital does not matter: Local contexts of reception and immigrant wages in Japan

Although research on immigrants in the US provides strong evidence that human capital is more important than social capital in determining their wages, data from Hamamatsu, Japan indicates that social capital variables are the primary determinant of immigrant earnings and human capital does not have a significant effect. The divergent impact of these two variables on the earnings of immigrants are a result of the different economic and social conditions that immigrants encounter in Japan compared to the United States. In a recent country of immigration like Japan where immigrant labor markets are relatively undeveloped and foreign workers are confined to unskilled, marginal jobs, the human capital that they acquire over time is not reflected in better jobs with higher earnings. In contrast, immigrants with access to social capital in the form of immigrant networks, gender, and ethnicity are able to obtain jobs with higher wages in Japan. Because foreign workers are still temporary target earners, they therefore rely heavily on their immigrant social networks to find better-paying jobs. In addition, Japan is a country with significant gender and ethnic discrimination where employers strongly prefer male foreign workers and ethnically similar nikkeijin (Japanese descendants born and raised abroad) and are willing to pay them significantly higher wages. Therefore, depending on the local context of immigrant reception, the relative importance of human versus social capital in explaining economic outcomes among immigrants can vary considerably.