Econ Theory (2018) 65:855–890

https://doi.org/10.1007/s00199-017-1041-4

RESEARCH ARTICLE

Immigration and the school system

Facundo Albornoz1,2 · Antonio Cabrales3 ·

Esther Hauk4

Received: 18 August 2016 / Accepted: 9 March 2017 / Published online: 27 March 2017
© The Author(s) 2017. This article is an open access publication

Abstract This paper presents a tractable model to study the effect of immigration on
host countries’ school system and student outcomes. In our model, education quality
and student outcomes are determined endogenously by the interaction of parents,
schools and policy-makers deciding educational resources. Immigration decisions are
based on economic factors, immigration policy, as well as on “parental motivation”
(parents’ concerns about their children education achievement). The model yields
results that are consistent with central empirical regularities of the school effects of
immigration: (1) there is a negative effect of immigrant pupils on native students;

We thank Paula Calvo for excellent research assistance. We thank Roberto Burguet, Jesus
Fernández-Huertas Moraga, Héctor Calvo-Pardo, Omar Licandro, Paolo Giordani and seminar
participants at the IAE, LUISS, Universidad de San Andrés, UB, University of Valencia, MOVE
Workshop on Cultural Economics, INSIDE-MOVE, NORFACE, CReAM: VI Workshop on Migration
and Labor Economics, NYU Abu Dhabi and CSEF Naples for valuable comments. Hauk acknowledges
financial support from the Spanish Ministry of Economy and Competitiveness through the Severo Ochoa
Program for Centers of Excellence in R&D (SEV-2011-0075) and through CICYT project number
ECO2012-37065 and from the government of Catalonia.

B Facundo Albornoz
[email protected]
Antonio Cabrales
[email protected]
Esther Hauk
[email protected]

1 School of Economics, University of Nottingham, Nottingham, UK

2 CONICET-IIEP, Buenos Aires, Argentina
3 Department of Economics, University College London, London, UK
4 Instituto de Análisis Económico (IAE-CSIC), Barcelona Graduate School of Economics, Campus
UAB, Bellaterra, Barcelona, Spain

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 856 F. Albornoz et al.

(2) the increasing shares of immigrant students are associated with the decline of
school resources and quality; (3) the school performance of immigrant children is
positively associated with immigration costs; and (4) school achievement increases in
parental motivation and those immigrant children with highly motivated parents tend to
outperform native children. Importantly, our analysis clarifies under which conditions
these empirical regularities take place and emphasizes that the effect of immigration
on native pupils is mediated by the way the school system reacts to changes in class
composition.

Keywords Education · Immigration · School resources · Education quality ·

Parental involvement · Immigrant sorting

JEL Classification I20 · I21 · I28 · J24 · J61

1 Introduction

Immigration is a prevalent feature of many societies. Given that immigration involves

families, the future of the host societies depends on how immigrant children perform
at school and how their presence affects the school system.1 Clearly, the school suc-
cess of immigrant children has a direct impact on human capital accumulation in the
host country. But also, as immigrant children are to be schooled, they change class-
room composition and school resources. Therefore, they might have a sizeable (not
necessarily negative) impact on school quality and the performance of their native
peers.
Logically, the educational effect of immigration is a core concern of policy-makers
and has generated a lot of research effort, mainly empirical. 2 Among the many findings
of this literature, we concentrate on the following empirical regularities (for which we
give precise references in a few paragraphs) which are very important for the public
discussion: there is a negative effect of immigrant pupils on native students (empirical
regularity 1); the increasing shares of immigrant students is associated with the decline
of school resources and quality (empirical regularity 2); the school performance of
immigrant children is positively associated with immigration costs (empirical regu-
larity 3); school achievement increases in parental motivation and those immigrant

1 To grasp the importance of immigrant children, according to the US Census Bureau, 34% of all youth aged
15–19 in 2000 were from minority groups and one in five school-age children live in immigrant families
(Kao and Thompson 2003). The Innocenti Research Center reports that almost a quarter of children were
immigrants in 2009 in the Netherlands, Germany, Sweden and the USA. This proportion is about one-sixth
in France and Great Britain (Alba et al. 2011).
2 Studies like those conducted by PISA, and other international organizations (like TIMSS or PIRLS)
have allowed for the empirical analysis of immigrant educational success and the externalities imposed on
natives. In many countries, a large fraction of immigrant children face substantial disadvantages in reaching
educational parity with native children (Heath et al. 2008; Anghel and Cabrales 2014). On the other hand,
immigrants often outperform natives students in Australia and Canada (Schnepf 2004). It is also common
for some immigrant students to be top of their classes (Card 2005; Dustmann and Theodoropoulos 2010;
Dustmann et al. 2010). Immigrant students perform differently by origin group (Levels et al. 2008; Levels
and Dronkers 2008) and cross-nationally (Marks 2005).

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 Immigration and the school system 857

children with highly motivated parents tend to outperform native children (empirical
regularity 4). These (and other) regularities notwithstanding, there is relatively little
theoretical work to contextualize the empirical evidence and to inform future empiri-
cal investigations. In this paper, we present a tractable model that connects schooling
with immigration decisions. Within this framework, we study under which conditions
empirical regularities 1, 2, 3 and 4 take place and obtain a number of additional results
that highlight that the effect of immigration on native pupils crucially depends on how
the school system reacts to immigration-induced changes in classroom composition.
While some of these regularities can be accommodated in other models,3 our model
can simultaneously produce all of them. Furthermore, the association of school perfor-
mance with parental immigration cost is unique to our analysis. This regularity must
be due to some selection process.4 The process we propose is based on selection in
terms of (parental) motivation; a term we use to refer to parents’ concerns about their
children’s educational achievement. Parental motivation captures the intrinsic motiva-
tion of parents to educate their children and “identified” motivation reflecting parents’
perceived value/importance of their involvement for their child’s success.5 Parental
motivation is the most likely driver in the selection process that determines the effect of
immigration on the school system; clearly, it is more relevant than child’s actual abil-
ity, since immigration decisions are made in the absence of a precise signal about the
ability of children who might not even be born when the immigration decision is made.
In any theory connecting immigration with schooling, student outcomes must be
determined endogenously as a result of the interplay between different families (immi-
grants and natives) and the school system. In our model, parents (immigrants and
native) not only differ in their wages (reflecting different talent or skills), but also in
parental motivation. Thus, the schooling effects of immigration depend on parents’
characteristics, such as wages and skills, but also on parental motivation. By introduc-
ing this dimension into a theory of education and migration choices, we will generate
results consistent with the empirical evidence and study what factors induce either
positive or negative effects of immigration on the host country’s school system.
In our framework, children are short-sighted and need to be motivated to study.
Parents divide their time between working and motivating their children, and they
decide whether or not to emigrate. Schools provide additional motivational schemes
to enhance children’s learning effort. The effect of these schemes depends on school
resources, which are determined by the education policy. In this framework, learning
is a process involving the interaction among children, parents, schools and the decision
of school resources. Thus, attainment and school quality are endogenously determined
by classroom composition, which is itself affected directly by immigration.
As a necessary result, we show how the educational effect of immigration crucially
depends on immigrant parental motivation. We begin by establishing why host coun-
tries that are concerned about future human capital would like to attract immigrants

3 Regular peer effects for example could explain empirical regularities 1 and 2.
4 We thank an anonymous referee for this observation.
5 Several studies in the psychology literature try to measure this non-observable variable “autonomous
motivation” with the help of self determination theory and reveal its importance in terms of parental
involvement in their children’s learning (Bouchard et al. 2007; Katz et al. 2011; Grolnick 2015).

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 858 F. Albornoz et al.

with high parental motivation.6 The reason is that children’s learning effort increases
in parental motivation; hence, highly motivated immigrant parents are more likely to
have skilled children, thereby positively contributing to the future human capital of
their host country. This mechanism immediately leads to empirical regularity 4. The
evidence for this observation is vast both in the educational literature and in the eco-
nomic literature. Parent involvement has been shown to increase children’s motivation
(e.g., Gonzalez-DeHass et al. 2005; Grolnick and Slowiaczek 1994; Sanders 1998),
as well as their grades and achievement, in families of diverse ages and backgrounds
(e.g., Fan and Chen 2001; Jeynes 2005, 2007). One important factor is disseminating
the importance of education and fostering high expectations about children’s school
success. By engaging in educational activities with their children, parents commu-
nicate their expectations for achievement (Hoover-Dempsey et al. 2001, 2002). The
economic literature confirms these findings. The empirical evidence about the effect
of exceptionally motivated immigrant parents (as in our empirical regularity 4) is well
established in the case of immigration to the USA (see e.g. Glick and White 2004;
Hao and Bonstead-Bruns 1998; Keller and Tillman 2008; Goyette and Xie 1999).
By embedding our theory of education into a model of immigration decisions, we
identify conditions under which migration is selected by parents with higher parental
motivation. These conditions involve a sufficiently high expected absolute skill pre-
mium for the immigrant children relative to the parental wage gain from immigration
(“Absolute Skill Premium”) and sufficiently strong education incentives at the host
country (“Education Incentives”); a condition that captures the expected wage of a
skilled worker weighed by educational motivation provided by the school. Meeting
these conditions implies positive selection in terms of parental motivation within dif-
ferent skill levels.7 The empirically observable implication we derive from this result
is the above-mentioned empirical regularity 3: the performance at school of immigrant
children should be higher when the costs of migrating from the source country are
higher, and this stems from their having more highly motivated parents. This result is
consistent with Dustmann et al. (2012) and Albornoz et al. (2011). Dustmann et al.
(2012) find that Turkish immigrants outperform those of the same cohort who stayed
in Turkey, but this empirical observation cannot be explained by the presumably higher
quality of the school system at the host countries: Turkish emigrants in Switzerland
and Denmark outperform those who migrated to Germany and Austria despite the
relatively similar levels of the school quality in these countries. Importantly, this find-
ing is not explained by differences in education levels of parents and socioeconomic

6 This is the focus of the present paper. We do not claim that future human capital should be the only
concern in immigration policy. Our model is designed to address this issue and is far too simplistic to give
a realist picture of other questions.
7 Notice that our notion of positive immigrant selection is very different from the typical notion of positive
immigrant selection in terms of skills in the immigration literature as analyzed for example by Borjas
(1987, 1999). In this literature, the skill premium is also important: Grogger and Hanson (2011) account
for positive selection in terms of skills associated with the absolute difference in earnings of skilled workers
at the host and source country. But the only skill premium that matters in this literature would be parental
skill premium. In our model, selection crucially depends on parental motivation and the expected skill
premium of the children. Notice as well that when these conditions are not satisfied, positive selection
requires lowering immigration costs. As we discuss below, this would give support to lenient immigration
strategies as those implemented by Argentina.

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 Immigration and the school system 859

characteristics.8 Our model can explain this finding as migration costs to Switzerland
and Denmark are arguably higher than those associated with Germany and Austria;
where the Turkish community is large and strong. In Albornoz et al. (2011), we show
that immigrant children in the Madrid (Spain) perform better if their parents faced
higher immigration costs after controlling for different family and country of origin
characteristics such as skills or the education system at the origin country. Our anal-
ysis also shows how the exogenous quality of the school system improves immigrant
selection in terms of parental motivation.
As documented by many papers Jensen and Rasmussen (2011), Brunello and Rocco
(2013), Gould et al. (2009, e.g.), immigration appears to hit native pupils. In our frame-
work, this regularity (empirical regularity 1) is explained by the arrival of immigrants
with low motivation. However, we qualify this result. First, a negative selection of
immigrant parents reduces the school effort of native students; this hits particularly
the native students with relatively low parental motivation. This provides a potential
explanation for the negative effect of immigrants on native outcomes being larger for
native students from a more disadvantaged socioeconomic background (Gould et al.
2009; Betts 1998; Brunello and Rocco 2011). Second, school quality matters. In our
framework, immigrant students, whatever the motivation of their parents, perform
better in higher quality schools. Gould et al. (2004) provides empirical support to
this feature. Thus, the potential negative effect of immigrant students on their native
classmates also depends on the pre-immigration school quality.
We also look at the effect of immigration on school resources in a world where public
schools are financed by parents through taxes. We assume that the policy-maker max-
imizes the utility of the median voter parent, and show that school resources increase
in immigrant parental motivation. Hence, a negative selection in parental motivation
leads to empirical regularity 2: immigration reduces public resources allocated to edu-
cation. Evidence of immigration reducing public education expenditures is provided
by Dottori et al. (2013), Coen-Pirani (2015) (California), Speciale (2012) (Europe),
and Farre et al. (2011) (Spain). Therefore, immigration also affects schooling through
the responses of the education policy, not only by the presence of immigrants itself.
In addition to explaining regularities 1, 2, 3 and 4, we show that even if a country
attracts highly motivated unskilled workers, the responses of native parents to the
presence of immigrant pupils matter. Turning to empirical regularity 1, we show that
increasing the share of children of unskilled immigrant parents might create incentives
for a flight from some schools into others (private or in other neighborhoods), which
would increase segregation. This result connects our paper with an empirical literature
analyzing immigration and enrollment in private schools. Betts and Fairlie (2003) find
that American-native students fly toward private secondary schools in response to the
influx of immigrants into public institutions. Cascio and Lewis (2012) low-skilled
immigration reduces native demand for public school in California. Berniell (2010)
and Farre et al. (2011) provide similar evidence for the case of Spain in the nineties.
This paper is related to a recent literature that focuses on how the effect of different
education policies depends on the behavioral responses of the different actors involved

8 The evidence provided by Dustmann et al. (2012) suggests that there has to be a within skill attribute.

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 860 F. Albornoz et al.

in the education process. For example, Pop-Eleches and Urquiola (2013) find a positive
effect of school quality on student scores for the case of Rumanian high schools. Fur-
thermore, they show as well that parental effort and quality-improving school activities
substitute with each other, as in our model.9 Stinebrickner and Stinebrickner (2008)
and De Fraja et al. (2010) provide empirical evidence on the positive impact of parental
and student effort on educational achievement. De Fraja et al. (2010) also find that
school motivational activities are positively associated with student scores.10 Albornoz
et al. (2017) rationalize all these empirical findings in a model that connects the effect
of education policy on student outcomes with the behavioral responses of students,
teachers, parents and education authorities to policy-driven changes in classroom com-
position. Our model retains this element but focuses on the endogenous determination
of immigration selection and its effects on native students and school quality.
The remainder of the paper is organized as follows. Section 2 introduces the model
of parental motivation and the school system. In Sect. 3, we study immigrant selection
and discuss under which circumstances higher emigration costs can improve parental
selection. Section 4 studies the implications of the model for the school performance of
natives and immigrants. Section 5 examines how these implications differ according
to the skill composition of immigrant parents. Section 6 looks at the implications
of immigration for school resources. Section 7 discusses some immigration policy
implications and concludes.

2 Parental motivation and the school system

In this section, we develop the basic model of the school system. To fix ideas, we
focus on the host country, although our analysis extends straightforwardly to the case
of the source country. As in Albornoz et al. (2017), our school system results from
the interaction of students (children, who need incentives to put effort on learning),
parents (who work and set up costly incentives schemes for students), and teach-
ers/headmasters (who decide on the incentive scheme provided at schools). We also
assume that every parent has one child. We now describe our different actors in detail.
The students’ utility function:
The students are children who perceive learning as costly, because they would rather
play, and do not internalize the future benefits of studying today. As a consequence,
they need to be motivated to exert learning effort. The incentive scheme is put into
place by parents and the school. Let c pi be the strength of parental involvement for
every unit of child’s effort ei .11 Similarly, cT refers to the strength of the school

9 Additional evidence of the substitution between parental effort and school resources is provided by
Houtenville and Smith Conway (2008).
10 Sahin (2004) provides another example of how parent and students’ responses affect the impact of
education policies for the case of higher education tuition subsidies. Evidence of the interaction between
parents and the school system mediated by monitoring of schools is offered by Ferreyra and Liang (2012).
11 Parental involvement includes activities at home like supervising children, explicit help with the
homework, discussing school issues and providing reward schemes as well as school based activities like
volunteering at school, attending school functions. (Hoover-Dempsey and Sandler 1997).

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 Immigration and the school system 861

/teacher’s involvement.12 As suggested by empirical evidence (Houtenville and Smith

Conway 2008; Pop-Eleches and Urquiola 2013), we assume that parents and school
involvements are substitutes.13 We assume that both parental and school involvement
enter positively into the children’s short-term utility which is given by:

  1
Uic = c pi + cT ei − ei2 , (1)
2

where 21 ei2 is the cost of learning.14

The parents’ utility function:
Unlike children, parents understand the long-term consequences of their children’s
choices today, namely how the child’s learning effort when young influences the child
labor market prospects in the future. In particular, the probability that the child will
work in a high-skilled job equals the child’s learning effort ei , while the child will
become an unskilled worker with probability (1 − ei ). Wages at skilled jobs and
unskilled jobs are denoted by ws and wu , respectively, and could differ for native and
immigrant children (see, e.g., Algan et al. 2010). Hence, a child’s future labor market
prospect is given by
wic = wsc ei + (1 − ei ) wuc . (2)
Parents differ in their parental motivation15 which is modeled as the weight θi a parent
gives to her child’s labor market prospect in her utility function.16 Parents also value
their own welfare WiP . Hence, parental utility is given by

UiP = θi wic + WiP .

A parent has to split her total time T between working and setting up and executing
an incentive plan for her child. The time to generate the reward is given by c pi ei /2,
while the cost of generating incentives for their child is the foregone parental wage
w p . Our model can be modified to incorporate parental talent17 (as Albornoz et al.

12 Schools organize motivational schemes and special outings (e.g., school trips, theater and museum
visits) and set learning goals choosing reward schemes.
13 No qualitative change ensues if we assume the incentives to be complementary. This is because the
substitutability at the children’s utility level is mitigated by complementarities elsewhere. Albornoz et al.
(2017) discuss this issue in depth.
14 Instead of using positive reinforcement for learning efforts parents and schools could also work with
punishment when children do not study. It is not difficult to see that negative reinforcement induces the
same behavior in children than the positive reinforcement we model here.
15 Heterogeneity in parental motivation is one of the major differences of the present model to Albornoz
et al. (2017).
16 Empirically, parental motivation is likely to be positively correlated with parental work ethic. Although
this link is not captured in the present model, it is easy to extend the model to incorporate work ethic by
letting parents allocate their time between leisure, education and work and assuming that the same parameter
affects the weight given to education and inversely the enjoyment of leisure. This specification was used in
a former version of the model leading to qualitatively similar results.
17 Denote parental talent by v P . On the one hand, parental talent v P increases wages w P = v P φ P
i i i i i
where φiP refers to the parental baseline wage rate. On the other hand, parental talent decreases the time

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 862 F. Albornoz et al.

2017 do explicitly), and the only major change that arises is that the interpretation of
w p would change. Hence, the parental utility function is given by the expression
 
 c  1
UiP = θi ws ei + (1 − ei ) wu + T − c pi ei w p .
c
(3)
2

The school’s utility function:

Schools/teachers also fully understand and care about the future job perspectives
of their students, assigning weight θ T to the average student’s success. The teachers
have to decide how much of the time TT that remains after teaching their compulsory
hours they will use to motivate their students (such as training or preparing learning
activities), and how much they will use for outside job opportunities (such as private
tutoring) which are paid at wage rate w T . The teacher’s time spent generating the
1 M 1
reward cT is equal to M i=1 2 cT ei where M is the total number of children in the
classroom. The school/teacher’s utility function is therefore

θT   c 1 
M M

U =T
ws ei + (1 − ei ) wu + TT −
c
cT ei w T . (4)
M 2M
i=1 i=1

Let M = M I + M N where M I is the number of immigrant children and M N the

number of native children. We can rewrite the school’s utility function as18

Footnote 17 continued
parents need to spend for generating their child’s incentive reward. This time is now given by c pi ei /2viP .
Introducing talent into our model would only complicate the exposition but would not affect the main
results.
It would, however, help to explain some counterfactual results on topics beyond the scope of the paper.
E.g. as it stands, this parental utility function implies that in our model a higher parental wage translates
into a lower expected wage of children, and thus lower intergenerational mobility. This would be reverted
if parental talent would also help in lowering the cost of motivating children.
18 Here, we assume that wages for immigrant and native children are the same if they have the same job.
The model can be easily modified to incorporate different (un)skilled wages for natives and immigrants,
respectively. The school’s utility function would become
⎛ ⎞
MN
 MI

θ T ⎝ cN c c
el + wu N M N + wu I M I ⎠
c c c
UT = ws − wu N ek + ws I − wu I
M
k=1 i=l
⎛ ⎛ ⎞⎞
MN
 MI

cT ⎝
+ ⎝TT − ek + el ⎠⎠ w T .
2M
k=1 l=1

where the superscript c N refers to a native child, while the superscript c I to an immigrant child. For
simplicity, we stick to the same wage version. This is basically equivalent to having higher wages for
c c c c
natives than immigrants but the same absolute skill premium ws N − wu N = ws I − wu I since it is the
absolute skill premium that provides the incentives for education in the present model. It is not difficult, but
notationally cumbersome, to extend the model for different absolute skill premia between immigrants and
natives. The qualitative results are basically unchanged.

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 Immigration and the school system 863

⎛ ⎛ ⎞ ⎞
θ T ⎝ c  MN  MI
UT = ws − wuc ⎝ ek + el ⎠ + wuc M ⎠
M
k=1 i=l
⎛ ⎛ ⎞⎞
c 
M N 
M I
+ ⎝TT − ⎝ el ⎠⎠ w T .
T
ek + (5)
2M
k=1 l=1

The structure of the game The school system is modeled as a two-stage game. In
the first stage, parents and schools simultaneously decide and announce the optimal
strength of their educational involvement in each unit of child’s effort: c pi and cT ,
respectively.19 After observing these announcements, children decide their optimal
effort ei .
Equilibrium We solve the game by backward induction.
In the second stage, children choose their optimal effort ei by maximizing their
utility function (1) taking parental incentives c pi and school incentives cT as given.
This leads to the following optimal effort decision by the children

ei = c pi + cT . (6)

In words, children’s effort is simply the sum of parental and school educational involve-
ment. We can now turn to the first-stage of the game where we need to substitute this
expression (6) into the parent’s utility (3) and the school’s utility (5). Taking the opti-
mal effort decision of children (6) into account, the teacher’s problem is to choose the
level of cT that maximizes
⎛ ⎛ ⎞ ⎞
θ T ⎝ c  MN
   MI
 
UT = ws − wuc ⎝ c pk + c T + c pl + cT ⎠ + wuc M ⎠
M
k=1 l=1
⎛ ⎛ ⎞⎞
c 
MN
  
MI
 
+ ⎝TT −
T ⎝
c pk + c T + c pl + cT ⎠⎠ w T .
2M
k=1 l=1

leading to the optimal school involvement/incentives

θT  c  M N c Np + M I c Ip
cT = w s − w c
u − , (7)
wT 2M

where

1  1 
MN MI
c Np = c Npk , c Ip = c Ipl .
MN MI
k=1 l=1

19 In order to ensure a interior solution, we impose motivation rewards to be positive as to avoid corner
solutions where c pi and cT may be zero.

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 864 F. Albornoz et al.

The strength of the school involvement depends on the average parental involvement
of both natives and immigrants, to which we turn now. Parents choose their incentive
scheme c pi to maximize
 
 c     c  1 
UiP = θi ws c pi + cT + 1 − c pi + cT wu + T − c pi + cT c pi w p .
2

leading to the optimal parental choice

  θi 1
c pi = wsc − wuc − cT . (8)
w p 2
We define relative parental concern ψi as the ratio of parental motivation to their
wage

θi
ψi = . (9)
wp
Also, we define the average relative parental concern among the native and foreign
population as

1  1 
Mk Mk
θi
k = p = ψi for k = N , I. (10)
Mk w
i=1 i
Mk
i=1

Using this notation, we can now derive the interior solution of the game.

Lemma 1 For a given school, the optimal strength of parental and school involvement
are
  
j  c  j 2 θT MI I + MN N
c pl = max 0, ws − wu ψl −
c
+ (11)
3 wT 3(M N + M I )
  
2 c  2θ T MI I + MN N
cT = max 0, ws − wu c
− . (12)
3 wT (M N + M I )

where j = N refers to natives and j = I to immigrants.

If both the schools and the child’s parent l choose a positive strength of involvement
the corresponding child i  s effort is

j  c  j 2 θT MI I + MN N
ei = ws − wu ψl +
c
− for j = N , I (13)
3w T 3(M N + M I )

Proof See “Appendix 1.” 



The above expressions indicate that school and parental involvement are substi-
tutes. Both involvements are driven by the potential gains from education captured

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 Immigration and the school system 865

 
by wsc − wuc . School involvement increase in school motivation θ T and decrease in
teacher’s outside job opportunities w T and in average relative parental concern since
M I  I +M N  N M
(M N +M I ) = M1 i=1 ψi . The higher this average, which implies the more par-
ents care on average for education, the higher parental involvement in their child’s
education.
j
An interior solution (i.e., a solution with 0 < ei < 1) exists where both the parents
and the school choose positive strengths of learning involvement for some conditions
j j I  I +M N  N
on the distribution of ψl . Specifically, positive strengths require ψl + M3(M N +M I )
>
2 θT I  I +M N  N
3 wT > M3(M N +M I )
which is a relationship comparing parental motivation and their
wages with school motivation and wages for outside job opportunities for teachers.
Observe that wθ T can be interpreted as a measure of school quality and we will refer to
T

it as net/relative school concern. Hence, the condition for positive incentives can be
interpreted as a relationship between school quality measured by the relative school
concern and individual and average parental quality measured by the relative individual
parental concern and relative average parental concern, respectively.
Until now, we have allowed parental concerns to be unrelated to teachers’ concerns.
In the real world, there is likely to be a connection. Research in the educational litera-
ture suggests that parental motivation positively reinforces the motivation of educators.
Bivona (2002) provides evidence showing that the lack of parental involvement is a
factor that lowers teacher morale. It is demoralizing for teachers to deal with disinter-
ested parents or, more generally, with student apathy. The positive effect of parental
support on teacher job satisfaction has been confirmed in several studies (see Lumsden
1998; Thornton 2004; Perie and Baker 1997 among others). Studies of teacher opin-
ions consistently reflected positive views of active parental involvement in children’s
education (Cutright 1984; Moles 1982) because a positive teacher experience empow-
ers them to teach more effectively (Lazar and Slostad 1999). A crucial relationship
between teachers’ sense of efficiency and parental involvement has also been found
by Ashton and Webb (1986) and Hoover-Dempsey et al. (1987). This perceived self-
efficacy is defined as “people’s judgments of their capabilities to organize and execute
courses of action required to attain designated types of performances. It is concerned
not with skills one has but with the judgments of what one can do with whatever skills
one possesses” (Bandura 1986, p. 391). It follows from Bandura (1997)’s work that
efficacy is a situation-specific attitude changing with circumstances and events (Grol-
nick and Slowiaczek 1994) A higher perceived self-efficacy is equivalent to higher
motivation: a higher perceived self-efficacy influences the amount of effort a person
devotes to the accomplishment of a specific outcome because it is related to a person’s
inherent beliefs of his or her capabilities to accomplish something, regardless of the
person’s actual competencies. Ashton and Webb (1986) and Gibson and Dembo (1984)
developed empirical constructs of teacher efficacy. Ross (1994) shows that teachers
with a higher perceived efficiency level exhibit enhanced student mastery of cognitive
and affective goals. The wide-spread research and government programs on how to
enhance family–school partnerships are entirely based on this positive link between
parental and school motivation (Garcia 2004; Flynn 2011; Sanders 1996; Hoover-

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 866 F. Albornoz et al.

Dempsey et al. 2002; Oostdam and Hooge 2013 among many others). To capture this
positive link formally, we postulate:

Assumption 1 θ T depends on the average parental motivation. That is,

k 
M
θ T = kθ = θi , (14)
M
i=1

where M is the number of parents affecting the education of a particular school class
of children and k indicates the exogenous weight that the school assigns to the future
wages of their students.

We are now in a position to analyze how parental motivation in general and immi-
grants’ parental motivation in particular affect the quality of the school system. In all
our further analyses, Assumption 1 is crucial whenever the result is qualitatively valid
only if school motivation increases in parental motivation (as in Propositions 1 and 8,
as well as as Lemma 3 and the discussion after Lemma 4 below). But as we just argued
extensively, the assumption is well founded empirically.
Using Assumption 1 in Eq. (12), we can express the optimal strength of school
involvement as:
   M   
2 wsc − wuc  2k 1
cT = max 0, − p θi , (15)
3M wT w i
i=1

Hence, schools will only choose a positive strength of involvement if

M 
 
2k 1
− θi > 0. (16)
wT w pi
i=1

In words, parental involvement will not crowd out school involvement if the relative
school concern is at least half the size of the average relative parental concern. Schools
must care sufficiently about their students’ performance. Moreover,

Proposition 1 School involvement cT increases in parental concern θi if and only if

w p > w2k .
T

Proof To see how positive school involvement changes with parental motivation, we
need to look at 
∂cT 2k 1
sign = sign − p ,
∂θi wT wi
which tells us that school involvement (15) increases in parental motivation for parents
p
whose wages are such that 2k/w T > 1/wi 


The ratio wkT is the exogenous term determining the net school concern wθ T = wkT θ
T

and can therefore be interpreted as the exogenously given school quality. It is also

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 Immigration and the school system 867

(proportional to) the marginal effect of parental motivation of parent i on the net school
concern, while the marginal effect on average relative parent concern is (proportional
to) w1pi . The condition of Proposition 1 relates parental wage, namely the opportunity
cost of parental involvement, to the inverse of exogenous school quality which is the
ratio of the school’s opportunity cost of teacher’s involvement to the weight schools
give to the future performance of their students. A higher parental concern will increase
parental involvement, but this increase might affect school involvement negatively
since parental and school involvement are substitutes. A sufficiently high exogenous
school quality makes school involvement more valuable and allows for both parental
and school involvement to increase in parental concern. Therefore, the lower bound on
parental wage for school involvement to increase in parental concern is proportional
to the inverse of exogenous school quality.
Assumption 1 allows us to characterize how a child’s learning effort depends on
parental motivation, namely
⎛  ⎞
1  2k
M
 c 
c ⎝ θi 1
ei = ws − wu p + − p θj⎠ , (17)
wi 3M wT wj
j=1

From this equation, it is straightforward to establish:

Proposition 2 Children’s learning effort is always increasing in parental motivation
θi .
∂ei
Proof This follows from ∂θi >0 

Propositions 1 and 2 reveal the crucial role of parental concern/motivation. On the
one hand, more motivated parents produce children with higher learning efforts, which
is clearly related to our empirical regularity 4 (parental motivation is also emphasized
by, for example, Doepke and Zilibotti 2014). On the other hand, if schools have a suffi-
ciently high exogenous quality, more motivated parents have a positive spillover on the
entire system by leading to a higher school involvement cT . Therefore, immigration-
receiving countries would like to attract immigrants with a high parental concern.

3 Immigrant self-selection

In this section, we study the immigration decision. There are two countries: Home
(H ), the source or origin country, and Abroad ( A), the destination or host country.
Each parent i in country H faces a fixed cost of immigration Fi . The variable Fi
follows the distribution F(.) in a large compact interval. Immigration policies may
affect this distribution in various ways, and we clarify their impact in terms of whether
they induce immigration to have a positive impact on the school system.
Both countries have a skilled and unskilled labor market, and their schools system
can be described by the model of the previous section.20 However, they may differ

20 We are implicitly assuming that how learning incentives translate into the probability of getting a skilled
job in the country in which education was received is the same across countries. The crucial element in our
analysis is that learning effort is endogenously determined according to different country characteristics.

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 868 F. Albornoz et al.

in the economic opportunities and the quality of the school system. Based on these
parameters, parents estimate the expected utilities of both staying and leaving their
country of origin. Immigration requires the utility difference to be higher than the
immigration cost.
j
Let U Pi denote parental utility when living within country j, namely
j j 1 j j p p
U Pi = θi ei wscj − wuc j + wuc j − c pi ei w j i + T w j i for j = H, A (18)
2
Using the optimal involvement and effort decisions derived in Lemma 1, the parental
utility after some simplification becomes
p
j p wji j∗ 2
U Pi = T w j i + θi wuc j + ei for j = H, A (19)
2
j∗
where ei is the optimal learning effort of i  s child when schooled in country j which
by (13) is

2 θj
T
j∗ j j
ei = wscj − wuc j ψl + − for j = H, A
3 wjT 3

M j j
where  j = M1 j k=1 ψk is the average relative parental concern in a school in
country j. We can therefore write parental utility as

j p
U Pi = T w j i + θi wuc j
2 ⎛   ⎞
wscj − wuc j θi2 2 θj
T
j 2 θj
T
j
2
+ ⎝ p + 2θi −
p
+ wji − ⎠
2 wji 3 w Tj 3 3 w Tj 3
(20)
p
Observe that the first term of parental utility T w j i corresponds to the maximum earn-
ings from working (what a parent can get by working all the time), while the second
term θi wuc j reflects the parental utility if the child does not make any educational effort.
Parental involvement in the child’s education increases the parental utility whenever
future skilled jobs are better paid than future unskilled jobs; that is if wscj > wuc j as is
reflected in the third term of (20).
A parent i will emigrate from country H to country A if U PAi − Fi > U PHi . From
(20), it follows that

Lemma 2 U PAi − Fi > U PHi if and only if

 p p   
T w Ai − w Hi + θi wuc A − wuc H
 2  c 2
θi2 wscA − wuc A ws H − wuc H
+ p − p
2 w Ai w Hi

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 Immigration and the school system 869

  
 c 2 2 θ AT A  2 2 θ HT H
+ θi ws A − wuc A − − wscH − wuc H −
3 wA T 3 3 wH T 3
⎛  2
1 ⎝ pi 2 θ AT A  c 2
+ wA − ws A − wuc A
2 3 wA
T 3
 ⎞
2
2 θ HT H  2
− w Hi
p
− wscH − wuc H ⎠
3 wH T 3
> Fi . (21)

Since the primary motive for emigration is the possibility of better economic oppor-
tunities, we assume that wages abroad are at least as high as wages at home and one
of the three wage parameters (expected parental wage w Pi , expected child’s wage if
skilled wsc and if unskilled wuc ) must be strictly higher.
 p Then,p we can interpret the
condition for immigration in Lemma 2 as follows: T w Ai − w Hi + θi wuc A − wuc H
describes the wage gain due to immigration if the immigrant parent dedicates all the
time to work. The parent might get a higher expected pay w APi ≥ w HPi
, and the unskilled
child might also earn more money wu A ≥ wu H which is weighted by the parental con-
c c

cern parameter θi . The remaining 3 lines of the sum describe the change in parental
utility from emigrating that is achieved by incentivizing the child at school and can
pi pi
w w
be rewritten as 2A e2A − 2H e2H (see Eq. 19). Parents and schools want to incentivize
children to increase their chance to get a high-skilled job, which is why the absolute
difference between skilled and unskilled wages enters in the three parts of the sum that
corresponds to the parental utility derived from the child’s effort. Since the parental
wage is the opportunity cost of parental involvement in incentivizing the child, a higher
wage has a negative effect on effort as captured by w pi dividing in the second line of
the sum. However, since school involvement and parental involvement are substitutes,
a higher w pi has an indirect effect by increasing effort that is captured by the final line
of the sum. The third term of the sum captures the change in parental utility due to a
change in school quality combined with the incentives for education.
Suppose the heterogeneity is such that the vector of variables
 p p 
ξi ≡ θi , w Ai , w Hi ∈ ,

characterizes each individual belongs to a finite set of types . At the same time, the
variable Fi follows the distribution F (.) in the compact interval [0, A] , where we
assume A > maxξi ∈ U Pi . Note that according to Eq. (21) if an individual with type
ξi and value for the cost of moving Fi wants to move, another individual with type
ξ j = ξi and F j < Fi also wants to move. Hence, the equilibrium can be characterized
by a set of thresholds. For each type ξ ∈ , there is some Fξ such that for all i with
ξi = ξ ∈  the individual moves to A if and only if Fi < Fξ . Thus,

Proposition 3 An equilibrium in immigration decisions always exists.

Proof See “Appendix 2.” 



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 870 F. Albornoz et al.

Understanding the effects of differences in parental motivation on the host and

source countries requires further clarification about how individuals from H self-select
into the migrant population. We turn to this question in the following subsections.

3.1 When immigration does select the most motivated parents

We aim at identifying the conditions under which the most motivated parents from a
source country are those who self-select into immigration. As migrating is an individual
decision, potential immigrants take  A and  H as given. This is the same as assuming:

∂ A ∂ H
= =0
∂θξ ∂θξ

Using the link of school motivation to parental motivation stipulated in Assump-

tion 1 and the condition for immigration stated in Lemma 2, we obtain the following
crucial result:

Proposition 4 Assume that wages in the host country are at least as high as wages in
the source country. Then, for any skill level, immigrant selection is positive in parental
motivation if the following conditions are satisfied:
1. Absolute Skill Premium:  c  
p
ws A − wuc A w Ai
 > p (22)
wscH − wuc H w Hi
2. Education Incentives:

1 c 2 2k A
wuc A + ws A − wuc A θA − A
3 w TA

1 c 
c 2 2k H
≥ wuc H + w − wu H θH − H (23)
3 sH w TH

Proof It follows from inspection of Eq. (21). See “Appendix 3” for the details. 


The ratio of absolute skill premium for children between the receiving and sending
countries has to be higher than the (square root of) ratio of parental wages in sending
and receiving countries (the gain from immigration).21 This condition places an upper
bound on parental wages abroad, which nicely captures the trade-off parents face when
incentivizing their children: forgo parental wage versus higher expected wages for
their children. A sufficiently high absolute skill premium for children guarantees that
parents incentivize their children more abroad than at home. But this is not sufficient

21 Notice that this condition can be satisfied even if the relative skill premium is lower in the host country.
We are interested in the future human capital of children and therefore in parental selection, for which the
absolute skill premium for children matters more. Grogger and Hanson (2011) document the importance
of the absolute skill premium for parents to explain immigrant selection in parental education.

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 Immigration and the school system 871

for positive parental selection. The external environment at the host country has to be
sufficiently favorable. To see this, notice that condition (23) can be reformulated as:

1 c  ∗ 1 c  ∗
wuc A + ws A − wuc A cTA ≥ wuc H + ws H − wuc H cTH (24)
2 2
Thus, we can interpret education incentives as a measure of the expected wage
increase for a skilled child weighted by the education incentives provided by the
school. This measure has to be higher at the host country. It is instructive to consider
a situation in which both countries are identical except for their wage structure. More
technically,
Corollary 1 If the host and the source countries have the same exogenous quality
of the school system (2k A /w TA = 2k H /w TH ); the same initial distribution of parental
motivation; the same distribution of parental motivation among skill groups; and the
same proportion of people in skilled employment, then a higher absolute skill premium
at the host country is sufficient for inequality (23) to hold.
Proof Notice that due to the equality in exogenous school quality
 
2k A 2k H
θA − A > θH − H ⇔ A ≤ H ,
w TA w TH

or equivalently
1  p 1  p
θi /w Hi ≥ θ j /w Ai .
MH MA
This is true since wages in country A are at least as high as wages in country H, and
the distribution of parental motivation among skill groups is identical. 

Obviously, if the exogenous school quality is better abroad than at home so that
2k A /w TA > 2k H /w TH , condition (23) is relaxed. This result suggests that immigration
is more likely to positively select motivated parents when the host country pays a
higher future absolute skill premium and school quality is better, provided that intrinsic
parental motivation is not much higher in the source country. Arguably, this describes
a situation where immigrants arrive to highly developed countries from developing
countries.
Proposition 4 sheds light on how immigration policies that affect immigration costs
for all immigrants influence the selection of immigrants and consequently the educa-
tional performance of immigrant children, which is increasing in parental motivation.
Notice that conditions (22) and (23) being satisfied characterize a situation where
highly motivated parents enjoy relatively higher benefits from emigrating. As a con-
sequence, selection improves with higher emigration costs. This implies the following
two results that provide a theoretical explanation for the aforementioned empirical
regularity 3. The proof of Propositions 5 and 6 follows directly from (21) and Propo-
sition 2.
Proposition 5 For a given host country, immigrant children who perform better are
those whose parents faced the higher emigration costs.

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 872 F. Albornoz et al.

In Albornoz et al. (2011), we provide empirical support to this result. More precisely,
we present novel empirical evidence according to which immigrant performance in the
standardized exams for all primary schools in the Madrid region do indeed improve
with emigration costs. Proposition 4 also implies the flip-side of the argument:

Proposition 6 For a given origin country, immigrant children perform better in host
countries for which the emigration costs are higher.

An interesting case consistent with this result is provided by Dustmann et al. (2012),
who show that Turkish immigrant children not only outperform kids staying in Turkey
but also their student achievement varies across four countries with relatively simi-
lar education quality: Germany, Austria, Switzerland and Denmark. According to
Dustmann et al. (2012), Turkish immigrant children do considerably better in Switzer-
land and Denmark compared to similar Turkish immigrant children in Germany and
Austria—conditional and unconditional on parental background characteristics and the
quality of schools they attend. Given that migration costs from Turkey are arguably
higher for Switzerland and Denmark than for Germany and Austria, this corollary
provides an explanation to this fact.22
Hence, our model generates empirical regularity 3, but also contextualizes under
which conditions the observable evidence is consistent in equilibrium. Moreover, in
situations where conditions of Proposition 4 fail, immigration no longer selects the
most motivated parents. To this we turn now.

3.2 When immigration does not select the most motivated parents

In this section, we briefly discuss the cases where the conditions for a positive selection
of immigration in terms of parental motivation no longer hold. In these cases, migrants
are not among those who are more motivated and thus the effect of immigration on
the school system will be negative.
When both condition (22) and condition (23) are violated, both the parental trade-
off, and the external education incentives are worse abroad than at home. This typically
happens because the benefits from education abroad (the absolute skill premium) are
lower than at home. Hence, the incentives to educate children are weaker. Moreover,
unskilled wages abroad cannot be much higher than at home. For this reason, parents
with higher parental concerns would not migrate and immigrant selection would likely
fall on the least motivated parents.
When condition (22) is violated but (23) is satisfied, parental selection is likely
to fall on intermediate levels of parental motivation. On the one hand, the tension
between parental wages abroad and the child’s future wages is resolved in such a way
that parents work more hours and incentivize their children less, which is a loss for
motivated parents. On the other hand, the external environment children face abroad
is more favorable, which is a gain for motivated parents. These two countervailing

22 The size of the Turkish community in Germany and Austria provides a reason why the migration
costs from Turkey might be lower in these countries. Language distance between Danish and Turkish and
relatively more strict immigration laws in Switzerland provide additional reasons.

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 Immigration and the school system 873

forces are likely to prevent the most motivated and the least motivated parents from
emigrating.
When condition (22) is satisfied but (23) is violated, parents set higher education
incentives abroad than at home, but the external environment for children is worse
abroad. The benefits of immigration (which are a quadratic function of θ ) first fall
in parental motivation till they reach a minimum and then rise again. Hence, par-
ents willing to emigrate are likely to fall into the extreme ends of the distribution of
parental motivation. Observe that this case only happens
 rarely. To see this, recall that
wuc A > wuc H by assumption, hence wscA − wuc A > wscH − wuc H is a necessary (but
not sufficient) condition for condition (22) to hold. This implies that the returns to edu-
cation are higher abroad, which positively affect both parental incentives and school
incentives. Therefore, condition (23) can only be violated if external school quality
and average parental motivation at home is much higher than abroad, and unskilled
wages are very similar. But in this case also the last line of the condition to emigrate
given by (21) will become negative and even very low Fi might not be sufficient to
induce emigration.23
The empirical implications of the model can change considerably if we look at host
and origin countries where condition (22) is violated. This happens for example if it
is mainly the unskilled jobs that are better paid in the destination country than in the
origin country. If condition (23) is also violated, it makes sense for the destination
country to adopt policies that reduce immigration costs in order to be able to attract
also immigrants with a high parental motivation, irrespectively of their level of skills.
An example of this situation is given by the immigrants hosted in Argentina from
countries like Bolivia, Peru or Paraguay Gasparini et al. (2009). These origin countries
are characterized by a very high differences between skilled and unskilled wages,
certainly as high as in Argentina. Also, the wages in Argentina are not that much
higher. This gives some theoretical support to the immigration strategy of Argentina,
which has one of the most lenient immigration regulations in the world (Albarracín
2004).
If (23) holds, selection falls on the intermediate range of parental motivation. In
this case, whether it is good for a country to adopt policies that reduce or increase
immigration costs depends on the exact distribution of θ . Under intermediate selec-
tion, a decline in immigration costs will expand the interval of values of θ for which
emigration occurs at both extremes which can influence in either direction the immi-
grants’ average level of θ . More specifically, if θ follows a non-increasing density
function, then a reduction in immigration costs induces a decline in the average level
of θ (McKenzie and Rapoport 2010).
The above results indicate that immigration policies should be specific to the country
of origin. For origin countries where both the condition on the absolute skill premium
(22) and the condition on the external education incentives (23) are satisfied, imposing
additional costs will improve immigrant selection in parental motivation. Otherwise,
lowering immigration costs but setting strict and low quotas might be the better policy.

23 Observe that at least for low-skill immigrants, the main economic motive for immigration reflected by
p p
the value of T (w Ai − w Hi ) will also be very low.

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 874 F. Albornoz et al.

3.3 School quality

In the previous section, incentives to immigrate were both shaped by the economic
incentives and possibly the difference in school systems. It will be useful to understand
the effect of differences in school quality in isolation. In order to do so, we assume
that school quality is the only difference
 between H  (Home)
 and A (Abroad)
 and that
2 θA 2 θH
T T
A H
school quality is better abroad, i.e., 3 wT − 3 > 3 wT − 3 . Under these
A H
assumptions, immigration occurs if (21) holds which reduces to
 
 2 2 θ AT A 2 θ HT H
θi wsc − wuc − − −
3 w TA 3 3 w TH 3
⎛  ⎞
2 2
1 c 
c 2 pi ⎝ 2 θ A
T
A 2 θ HT H ⎠
+ ws − wu w − − −
2 3 wA
T 3 3 wH T 3
> Fi . (25)

which after some examination implies:

Proposition 7 The cost that a parent is willing to pay to immigrate increases in school
quality, but it increases proportionally more for parents with higher motivation.

Proof It is easy to see that the cross derivative of left-hand side of (25) with respect
2 θA 2 θH
T T
A H
to θ and 3 wT − 3 > 3 wT − 3 is positive. 

A H

In other words, if immigration costs increase, but at the same time school quality
increases, the selection of immigrants should improve since those that get discouraged
with the higher costs are more likely to be those for whom the increase in school quality
matters less. Although we do not believe that school quality per se is the main reason of
emigration for the majority of people who leave their country, the result nevertheless
has an interesting testable implication: the school performance of immigrant children
should be better in countries with higher immigrations costs and high quality (public)
schools. Gibson and McKenzie (2011) provide some evidence for this prediction: they
show that the quality of Australian schools is a key pull factor for the most qualified
immigrants arriving from New Zealand, Tonga and New Guinea Papua.

4 The school performance of immigrant and native children

Our model reveals that the effect of the immigration on the school system depends on
the type of parents that immigrate. It can therefore guide us to understand empirical
observations on immigrant school performance and their effects on native perfor-
mance.
In empirical studies, student outcomes constitute a typical empirical measure of
school quality. Since these outcomes depend on children’s learning effort, we now
examine this effort in more detail. It is clear from Eq. (13) that among children in

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 Immigration and the school system 875

the same school it is their parents’ characteristics ψi , namely the relative parental
concern—the net pay-off from parental investment, that determines who has the higher
learning effort. If we apply this to the difference in learning effort between an immi-
grant child and a native child, then
 c 
eiI − e Nj = ψiI − ψ jN ws − wuc

which implies that the effort of immigrant children is greater than of natives on aver-
age if and only if  I >  K . Having established this, the next proposition follows
immediately:
Proposition 8 The children of immigrants exert more effort at a given school than
natives if and only if the average relative parental concern is higher among immigrant
parents than natives.24
Therefore, immigrant children performing below average is a sign that immigra-
tion policies do not select on average the most motivated parents. Similarly, we can
conclude that a highly performing immigrant child will have highly motivated par-
ents. Indeed, Proposition 2 reveals that a higher parental motivation always translates
into a better performing child via a higher education effort. From Proposition 1, we
know that school involvement only increases in parental motivation of parents whose
wage is not too low, in particular for parents where w p > w2k . Schools will still set
T

incentive schemes for their students when this condition is violated for some parents
but is satisfied for a sufficient amount of parents (technically, condition (16) holds).
Highly motivated parents with too low wages in these types of schools have a negative
effect on school involvement, but the direct effect of rising parental involvement on
student effort offsets this negative impact on the school. Hence, the greater learning
effort of children from highly motivated parents must come because of the parents’
higher demands. The empirical evidence about the effect of exceptionally motivated
immigrant parents (as in our empirical regularity 4) is vast in the case of immigration
to the US. As shown by Glick and White (2004) and Hao and Bonstead-Bruns (1998),
immigrant parents are associated with greater demands on their children in terms of
school engagement and academic achievement. Keller and Tillman (2008) find that
both parental and self-reported expectations have significant direct effects on college
attendance. Goyette and Xie (1999) provide evidence that in the USA the behaviors
and expectations of Asian immigrant parents’ tend to raise their children’s school
attendance above the average.
The net parental concern ψi = wθpi i also plays an important role in explaining the
variation in school performance of native children due to immigration. Observe that
we can rewrite the child’s effort (17) as
  1
ei = wsc − wuc ψi + cT . (26)
2

24 While Proposition 8 is stated for the school level, it generally holds when the environment of immigrants
and natives are the same. In a country as a whole, it would hold if all schools are the same and immigrants
and natives are equally distributed among schools.

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 876 F. Albornoz et al.

This expression allows us to analyze how immigration affects the performance of

native pupils and contextualize the emergence of empirical regularity 1 and clarifies
under which conditions this observation is consistent with an equilibrium in our model.
For a given school, the relative effect of immigration on native children varies with the
net parental concern. A change in cT simply shifts the initial effort up (if immigrant
parents are better on average) or down (otherwise), and therefore the relative change in
effort is lower the higher the pre-immigration effort level or equivalently, for children
associated with a higher ψi . In other words, the performance of disadvantaged children
(low ψi parents) is more affected by immigration than that of their more advantaged
classmates (high ψi parents). The evidence for this effect is considerable. Focusing
on the mass migration wave from the former Soviet Union to Israel in the early 1990s,
Gould et al. (2009) find a negative effect of immigrants on native outcomes which
is larger for natives from a more disadvantaged social background. Similarly, Betts
(1998) shows that immigration reduces the probability of completing high schools for
American-native minorities (Blacks and Hispanics). No negative effect of immigrants
is found for non-minority groups. Finally, Brunello and Rocco (2011) study whether
a higher share of immigrant pupils affects the school performance of natives using
aggregate multi-country data from PISA. They find evidence of a negative and sta-
tistically significant relationship, but the size of the estimated effect is small and it is
bigger for natives with a relatively disadvantaged parental background.25
Expression (26) also allows us to examine the effect of schools on immigrant per-
formance. A typical measure of school quality is the pre-immigration performance or
general performance of its native pupils. As discussed above, overall native perfor-
mance is partly driven by cT . According to (26), a higher level of cT would benefit
all children at the school, and hence this would include the immigrant children. This
is consistent with the vast evidence suggesting that better schools benefit immigrants
(Dronkers and Fleischmann 2010). The “Operation Solomon” provides a natural exper-
iment for this result. This refers to the exodus of 15,000 Ethiopian immigrants, who
were airborne to Israel within 36 h in May 1991. Importantly, they were randomly
sorted across the country. According to our model, the average performance of those
immigrants who were randomly placed into better schools should be higher. As shown
by Gould et al. (2004), this was exactly the case: those Ethiopians who were assigned
to better elementary schools 26 had better results in high school. Thus, empirical reg-
ularity 1 is an equilibrium outcome, but it depends on pre-immigration school quality.

5 The effect of immigrant skill composition

Parental net concern reflects both parental skills which determine parental wages and
pure parental motivation. This section disentangles the two parameters and serves to

25 Similarly, Ohinata and van Ours (2011) find no evidence of negative spillovers of immigrants on native
Dutch children. They do find, however, that the share of immigrants in a classroom is negatively associated
with the reading scores of immigrant children.
26 The measure of better elementary schools used by Gould et al. (2004) was the average standardized
maths scores before Ethiopian entered or other environmental measures such as welfare rate and average
high school matriculation rate.

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 Immigration and the school system 877

illustrate how different skill compositions effect the school system of the immigration-
receiving country and why. We first reformulate our results when schools’ involvement
in providing incentives is positive (Eq. 16) and how it varies with parental motivation
(Proposition 1) in a world where parents can have skilled and unskilled jobs.

Lemma 3 In a school with M U unskilled and M S skilled parents with corresponding

p p p
wages wu and ws = αwu , where α > 1, the school will choose a positive learning
involvement if
p p wT
ws = αwu > (27)
2k
and

p (β + α) w T
wu > (28)
2 (1 + β) kα
M S MU
where β = i=1 θi / i=1 θi .
The school’s learning involvement always increases in the parental motivation of
skilled parents. If
p wT
wu > (29)
2k

school involvement also increases in parental motivation of unskilled parents. How-

ever, if (29) fails, then school involvement decreases in the parental motivation of
unskilled parents.

Lemma 3 reveals that if unskilled wages are too low relative to the exogenous oppor-
tunity cost of schools to incentivize children (Condition (29) fails), then increasing
parental motivation among unskilled parents will reduce school quality. In this case,
positive school incentives require a sufficiently high-skill premium captured by the
parameter α. A higher α relaxes both conditions (27) and (28) and hence favors school
involvement in incentivizing students. The parameter β compares total parental moti-
vation of skilled parents with total parental motivation of unskilled parents and β > 1
if the former is bigger than the latter. A higher β relaxes (28). The skilled group is
sufficiently motivated so that the resulting positive effect on school incentive out-
weighs a potential negative effect of the unskilled parental group due to the violation
of condition (29).
In the case where highly motivated unskilled parents have a negative effect on
the school involvement and therefore impose negative externalities to the remaining
parents, it is important to distinguish parental skill from pure parental motivation.
The need for this distinction becomes even more crucial when immigration changes
classroom composition. To see why assume that (29) holds, which is likely in developed
countries which are targeted by immigration since these countries typically have a
reasonable exogenous level of school quality (2k/w T ). In other words, keeping the
skill level constant an increase in pure parental concern is always beneficial for school
involvement in providing incentives. However, things might look very different if

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 878 F. Albornoz et al.

immigration changes the skill composition at school.27 In a world with skilled and
unskilled workers, school incentives can also be rewritten as
      
2 wsc − wuc 2k 1 2k 1
cT =  U  − p M θ
U U
+ − p M θ
S S
. (30)
3 M + MS wT wu wT αwu

This expression allows us to disentangle the effect of only high skill and only low-
skill immigrations assuming a constant classroom size. If immigrants are positively
selected according to parental motivation and are only high-skilled workers matched
to high-skilled jobs, the effect on native student’s effort is positive (since the weight
given to w2kT − w1p is likely to be reduced and the weight given to the bigger
u

term w2kT − αw1 p is likely to be increased). If, however, immigrants are all posi-
u
tively selected but unskilled, then selection has to be extremely restrictive in the sense
that only immigrants with the highest motivation are admitted for the overall effect
on school incentives to be positive. Similarly, a negative selection of only unskilled
immigrants will always affect natives negatively, while a negative selection of skilled
immigrants has to be extremely negative to have the same effect.
A corollary of the previous point is that the selection of immigrants can have impor-
tant implications on school segregation. If the selection of immigrants is negative, or
even if positive, it involves mainly unskilled workers; this can easily lead to a flight
from some schools into others. In many countries, this implies a flight to the private
schools sector. Indeed, Betts and Fairlie (2003) find that American-native students fly
toward private secondary schools in response to the influx of immigrants into pub-
lic institutions. Similar results are found by Cascio and Lewis (2012) who show that
school districts in California with larger increases in low-English Hispanic enroll-
ment are those which exhibited greater relative reductions in the rate of settlement
of non-Hispanic children between 1970 and 2000. Also, Berniell (2010) discussing
the massive recent flow of immigrants into Spain shows that, in 1998–1999, when the
fraction of immigrants in Madrid was only 2.6%, about 59% of natives were attending
public schools, while one decade later—when immigrants comprised 17% of total
population roughly 50% of natives chose public institutions. On the other hand, in
1998–1999 only 68% of immigrant parents were choosing public schools, while in
2008–2009 this number raised to 77%. Farre et al. (2011) also discuss this phenomenon
for the Spanish case and provide a calibrated model where immigration is indeed the
driving force for this sorting.

6 The effect of immigration on school resources

In this section, we allow school resources to be endogenous. Let us denote by r the

amount of resources an administration gives to a particular school. This could be

27 If schools are segregated by the skill level of parents, i.e., children of unskilled workers are schooled
together and so are children of skilled workers, or if immigration does not change the classroom composition
of children with skilled versus unskilled parents, then the natives always benefit if immigrants have a high
parental motivation, and they suffer otherwise.

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 Immigration and the school system 879

thought of as class size (or teacher-student ratio) as well as other resources, such
as support to teaching staff, computers and other means of making the provision
of incentives easier for teachers. More resources reduce the teacher’s time cost of
providing incentives, which we model by dividing this time cost by the amount of
resources r . We assume r is the same for all schools, and it is announced by the
policy-maker before parents and headmasters decide on the level of incentives taking
r as given. Given r , the utility of a headmaster is now:

θT   c 1 
M M

U =T
ws ei + (1 − ei ) wu + TT −
c
ei cT wT . (31)
M 2r M
i=1 i=1

Following the previous analysis, we can obtain the equilibrium values of the key
variables of the school system:
Lemma 4 The optimal strength of the incentives set by parents is given by

j  c  j 2 rθT MI I + MN N
c pl = ws − wuc ψl − + for j = N , I. (32)
3 wT 3(M N + M I )

while the optimal school incentives are


2 c  2r θ T MI I + MN N
cT =
A
w − wu c
− . (33)
3 s wT (M N + M I )

The learning effort of an immigrant child and a native child given by (6) is therefore

j  c  j 2 rθT MI I + MN N
ei = ws − wu ψl +
c
− for j = N , I (34)
3w T 3(M N + M I )

Proof See “Appendix 4.” 


Now, we introduce the utility of the policy-maker who decides the level of resources
for the schools. The policy-maker maximizes the complete utility of the (median
voter) parent (denoted by P̄i ) which requires adding the cost of the school resources
(r ). This median voter is a native (the median of the natives) given that in most
countries first-generation immigrants do not get the right of vote, or they get it when
they are naturalized at which point most of their children will have already gone (at
least partially) through the education system.28 The assumption that the resources are
decided with the utility of the median voter in mind is a natural one, even if immigration
does cause some flight of students into private schools.29 The reason is that, in spite of

28 To become a US citizen, an immigrant must have been a permanent resident for at least five years.
Becoming a permanent resident also takes a few years, and we are considering immigrants who already
have children at the time they emigrate.
29 See Betts and Fairlie (2003), Cascio and Lewis (2012) for the evidence of public school flight due to
immigration in the US, Berniell (2010) and Farre et al. (2011) for Spain.

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 880 F. Albornoz et al.

the flight, a large majority of students in most countries are educated in public schools,
so the median voter typically has a concern for public school funding.30 In addition, it
is easy to see that the implications we derive below are unchanged qualitatively if the
politician makes decisions on resources based on the need of another order statistic of
the population, rather than on the median.
The costs of resources r are paid by parents through general taxation, which parents
care about, and are internalized by the policy-maker when deciding r . Resource costs
are assumed to be quadratic.31
Thus, we can represent the policy-maker’s preferences as,

ρ 2
U P M = U PM − r , (35)
2

where ρ is a constant parameter summarizing the cost of resources. Our formulation

assumes that schools are financed out of lump sum taxation and the government keeps
a balanced budget.
Substituting (34) and (32) into (35), and then optimizing U P M over r , we obtain:

 c 2 2 θT M I  I +M N  N
ws − wuc 3 wT θi M + w pi M 3(M N +M I )
r=  
 2 2 θT
2
ρ−w pi M
wsc − wuc 3 wT

Note that resources increase in the motivation of the immigrant populations through
two sources. First, r is increasing in θ T which by Assumption 1 depends on the aver-
age motivation of the student parents. Secondly, it also depends positively on the
parental motivation of immigrants through  I . Hence, the parental motivation of
immigrants reinforces the effects of immigrants selection that happen through cT ,
which we already discussed in Sect. 4. Thus, a poorly selected immigrant popula-
tion in terms of parental motivation hits the native students (and the more motivated
immigrants) directly through school incentives, and indirectly through a reduction in
school resources by the policy-makers.32

30 As OECD (2015) points out, the data shows that “At least 90% of all lower secondary students in 35
of the 39 countries with available data attended either public or government-dependent private institutions;
and the same percentage was observed among upper secondary students in 31 of the 39 countries with data
available. (Table C1.4a)”
31 This can be justified by taking into consideration that the state has monopsony power in the market for
teachers and faces a marginal cost function that increases in the number of teachers hired. This is so, for
example, because to attract one more teacher the monopsonist has to pay an extra cost, since the marginal
potential teacher needs a higher reward to be attracted to the profession.
32 Using Alexopoulos and Cavalcanti (2010), one can reach a contrasting conclusion. In their model, a
low-quality education system is associated with cheap domestic services, which are mainly enjoyed by
the political and economic elites. In presence of low-skill immigrants, who provide low cost services, the
elites would not oppose establishing a public education system to train domestic children. Thus, higher
quality of public education may be attributed to the arrival of low-skill immigrants. Notice, however, that
this argument would fail if immigrant children go to school, which is exactly the situation studied in our
paper.

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 Immigration and the school system 881

Several authors have found evidence that bad immigrant selection leads to a reduc-
tion in public spending on schooling (empirical regularity 2). Using a quantitative
model of school choice and voting over public education (Coen-Pirani 2015) shows
that education spending per student in California would have been 24 percent higher
in the year 2000 if US immigration had been restricted to its 1970 level. As in our
paper, Coen-Pirani (2015) abstracts from illegal immigration and allows only native
households to vote. His calibrated parameters indicate that immigrants in California
care relatively less for education than natives, hence our model provides an alternative
explanation for his findings. The relationship between resources dedicated to public
schools and immigration is also examined by Dottori and Shen (2008). They provide
cross-country evidence (e.g., a mean-difference test) that countries that experience
negative changes in public expenditure per pupil from 1990 to 2004 Docquier and
Marfouk 2006 data set) are those with larger increases in the low-skilled immigrants’
share of the population (UNESCO data). This finding is consistent with our model,
if low-skilled immigrants are also less concerned about education on average than
high-skilled immigrants. Indeed, this negative correlation disappears when (Dottori
and Shen 2008) look at changes in the share of immigrants with tertiary education
and lagged changes in public expenditure per pupil. As we also discussed in Sect. 4,
these effects will be reinforced if, in addition, there is a flight of natives away from
public schools into private ones, as Berniell (2010) documents has happened in Spain
recently, for example. The calibrated model of Farre et al. (2011) also indicates that
immigration in Spain led to a large reduction of about 11 percent in public spending
per student. Finally, Speciale (2012) finds this process to be prevalent in Europe.
There is possibly one more channel for immigrants’ motivation to impact education.
So far, we have assumed that the median voter is the median of the natives, the only
ones who can vote. But suppose that immigrants earn the right of vote sufficiently
early after arrival to the destination country. Then, poorly selected immigrants would
shift the median voter toward an individual who cares less about education and hence
lowers the level of resources even further. Obviously, the vicious cycle of selection
becomes virtuous in case of positive selection. There is a higher level of cT , a higher
level of resources r and the immigrant effect may be improved by enfranchising the
immigrants.
Another important observation is that our assumption on funding resources implies
that immigrants are legal, so they pay taxes. If they are illegal (non-tax paying) but
exogenous in number, we would effectively have a higher level of ρ, which would
entail a lower level of resources. If they were illegal and also their number were
endogenous, an increase in resources would bring more of them, and the effect is
less easy to compute but similar to having a technology with more rapidly decreasing
returns to extra resources.

7 Concluding discussion

In this paper, we propose a model of endogenous migration and human capital produc-
tion that allows us to reproduce the main empirical regularities in the literature which
we discuss extensively in light of our theoretical results. We emphasize parental moti-

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 882 F. Albornoz et al.

vation as a key characteristic to understand the effects of immigration on human capital

formation both of immigrant and native children. While some of the regularities could
be explained by other models,33 the association of children’s school performance with
parental immigration cost is unique to our analysis. It requires a selection process,
which we argue to be likely to be parental motivation and not actual child ability since
many migration decisions are taken before child ability is observed.34 Our model can
explain why students from different origins exhibit so widely different performances
in the host country even after controlling for observable characteristics and why stu-
dents from the same origin country perform better in some host countries than others.
Other results of our model are not surprising. We provide conditions under which
increased parental motivation also leads to a higher school involvement and show
that children’s learning efforts increase in parental motivation which trivially delivers
empirical regularity 4 that immigrant parents with highly motivated parents tend to
perform better at school. These more obvious consequences of parental motivation
demonstrate the robustness of our model.
Parental motivation per se is unobservable like intrinsic motivation to which it is
closely related. Recently, the economic literature has made huge progresses to measure
such variables. For example, Borghans and Schils (2015) have shown that PISA scores
can be used to measure non-cognitive abilities of students, such as “agreeableness, and
motivational attitudes toward learning” and those studies are predictive of the success
of those students later in life. Balart et al. (2015) in fact show that those same abilities,
picked up indirectly through PISA test scores, are predictive of national GDP growth.
More generally, Heckman and his co-authors (see, e.g., Cunha et al. 2010) have exten-
sively shown that non-cognitive abilities, hitherto thought difficult to measure,35 are as
important or more as traditional cognitive abilities in determining the human capital
of a population. Our model thus provides a challenge to the empirical literature to
try to measure parental motivation. The educational literature has already attempted
similar things (Bouchard et al. 2007; Katz et al. 2011; Grolnick and Slowiaczek 1994)
using questionnaires to capture the motivation for parental involvement. In Grolnick
and Slowiaczek (1994), these questionnaires present parents with different parental
involvement activities and ask parents how true the following reasons for their involve-
ment in the activity are: external (e.g., because I am supposed to), introjected (e.g.,
because I would feel guilty if I did not), identified (e.g., because I think it is important)
and intrinsic (because it is fun) (Grolnick 2015). Our parental motivation parameter
is closest to identified and intrinsic motivation in these studies.
Parental motivation may be correlated with other relevant attributes like work ethic
or sociability. Our analysis can be extended to understand the role of families in

33 If immigrant children study less, the negative effect of immigrant students on native performance
(empirical regularity 1) and the declining in school resources due to an increase in the share of immigrant
children (empirical regularity 2) could be both explained by a theory of simple peer effects. If native parents
are aware of the negative peer effects of immigrant children, this could lead to a flight to private schools
resulting to less political support for public investment.
34 We thank an anonymous referee for pointing this out.
35 McBride (2012) for example says that “non-cognitive traits are qualitative in nature making evaluation
more subjective and difficult to measure.

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 Immigration and the school system 883

improving assimilation of immigrants and their impact on host societies. It is important

to bear in mind that there is no clear correlation between parental motivation and other
observable measures of skill intensity like, for example, years of schooling. In this
sense, our analysis warns against immigration policies aiming exclusively at attracting
immigrants merely on their skills.
Our model can also be used to inform about the effects of different policies in terms
of the selection of immigrants in parental motivation. If next generation’s human
capital is the only concern, our model suggests that the naturalization of immigrant
children but not of the parents might be a good idea. Naturalization typically means
easier access to better jobs in the future.36 If only children are naturalized, these
children but not parents their will have a higher wage prospective for high-skill jobs.
In terms of our model, this increases the range of parameters for which condition (22)
holds and hence favors the selection of highly motivated immigrant parents and leads
to better school performance of immigrant children.37
The focus of this paper is on the school effects of immigration in the host country.
However, applying our model it is straightforward to understand the effect on the
educational system in the source country. For example, if immigrants were positively
selected and, thus, the most motivated parents leave their countries, this would imply
negative effects on their compatriots who stay home. In particular, this can lead to
lower school incentives in the source country, and hence to smaller learning efforts
of non-emigrant children under plausible conditions.38 In fact, Antman (2011) finds
evidence of the negative effect of immigration on schooling in the source country.
Refocusing the analysis to the home country is an obvious follow-up of this paper.
We restrict our analysis to the effects of immigration on the school system. Clearly,
immigration involves effects beyond schools; in the health sector, in the labor mar-
ket and in many other socially important phenomena. Hence, we do not provide
any specific prediction about the optimal policy mix regarding the number of immi-
grants. Nevertheless, our model uncovers important side and feedback effects, which
are generally overlooked in the design and implementation of immigration policy.
Notwithstanding the importance of these side effects, a rigorous evaluation of immi-
gration policies requires a model able to capture their general equilibrium implications;
an avenue we leave for future research.
Another important extension concerns the interactions between the political econ-
omy of the host country and education; immigrants, or at least their children, often

36 Bratsberg et al. (2002) provide evidence that in the USA naturalized immigrants have a more favorable
job distribution and higher wages than non-naturalized immigrants. Moreover, naturalization leads to further
wage growth. It allows entry into certain jobs that are reserved to nationals only, but also gives advantages
in terms of signaling long-term commitment and the flexibility to travail. The same results are found by
Steinhardt (2008) for Germany and Fourgère and Fougère and Safi (2008) for France.
37 This prediction in consistent with Dronkers and Fleischmann (2010) who study immigration in 13
EU countries and find that a significant macro-characteristic for the educational performance of immigrant
children is the destination country’s naturalization policy. In particular, the more generous the naturalization
policy, the higher the educational attainment of immigrant children.
38 For example, if (29) holds in the home country. The same is also true if (29) fails, but conditions (27)
and (28) hold and all emigrants are high-skilled.

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 884 F. Albornoz et al.

eventually achieve political rights39 and could importantly, and perhaps unexpectedly,
affect political outcomes.40

Open Access This article is distributed under the terms of the Creative Commons Attribution 4.0 Interna-
tional License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution,
and reproduction in any medium, provided you give appropriate credit to the original author(s) and the
source, provide a link to the Creative Commons license, and indicate if changes were made.

Appendix: Proofs

Appendix 1: Proof of Lemma 1

Using the notation introduced in (9) and (10), the optimal level of incentives of native
and immigrant parents (8) can be written as


  1 θT  c  M N c Np + M I c Ip
c Npi = ψiN wsc − wuc − w s − w c
u − . (36)
2 wT 2M

 c  1 θT  c  M N c Np + M I c Ip
c Ipi = ψlI ws − wuc − w s − w c
u − . (37)
2 wT 2M

The average parental incentives of immigrants and natives can therefore be written as

  1 θT  c  M N c Np + M I c Ip
c Np =  N wsc − wuc − w s − w c
u + . (38)
2 wT 4M
  1 θT  c  M N c Np + M I c Ip
c Ip =  I wsc − wuc − w s − w u +
c
. (39)
2 wT 4M

  
Notice as well that c Ip =  I −  N wsc − wuc + c Np . Using this and simplifying,
c Np and c Ip become:

 
  4M − M I MI 2 θT
c Np = wsc − wuc N + I − . (40)
3M 3M 3 wT
 
 c  3M + M I M − MI 2 θT
c p = w s − wu
A c
I + N − , (41)
3M 3M 3 wT

39 An interesting model analyzing when immigrants get political rights and its consequences is Ortega
(2005).
40 See Levy (2005) for an example of the subtle interaction between different types of groups and education
provision in a political economy context.

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 Immigration and the school system 885

and therefore:

 
2 c    (M N + M I )θ T
M N c Np + M I c Ip = w − wu 2 M I  I + M N  N −
c
. (42)
3 s wT

Plugging (42) into (36), (37) and (7), we then get the desired result.

Appendix 2: Proof of Proposition 3

       
Let I+ Fξ = i ∈M|ξi = ξ, Fi < Fξ , and  I− Fξ = i ∈  i = ξ, Fi ≥ Fξ .
 M|ξ
  by M+ Fξ the cardinality of I+ Fξ and by M− Fξ the cardinality of
Denote
I− Fξ Then,
 under a threshold equilibrium, we can write for any vector of thresholds
F = Fξ ξ ∈ ,

 θi  θi
i∈I+ ( Fξ ) w p i∈I− ( Fξ ) w pi
 I (F) =   i
 ,  H (F) =   .
ξ ∈ M+ Fξ ξ ∈ M− Fξ

Clearly
M+ (F)  I (F) + M N  N
 A (F) = .
(M N + M+ (F))

Let for any i with ξi = ξ ∈ 

G ξ (F)
⎧
⎨
p p
≡ max 0, T w Ai − w Hi + θi wuc A − wuc H
⎩
⎛ 2 2⎞
c c wscH − wuc H
θi2 ⎜ ws A − wu A ⎟
+ ⎝ p − p ⎠
2 w Ai w Hi
  
2 2 θAT 2 2 θHT
c c  A (F) c c  H (F)
+ θi w s A − wu A − − w s − w u −
3 wT 3 H H 3 wT 3
A H
⎛   ⎞⎫
2 ⎬
2 2
1 ⎝ pi 2 θ AT  A (F) 2 pi 2 θ H
T
 H (F)
+ wA − c c
ws A −wu A −w H − ws H −wu H ⎠
c c
2 3 wT 3 3 wT 3 ⎭
A H
(43)

Under these conditions, existence is guaranteed by a straightforward application

of Brouwer’s fixed point theorem, since G (.) is a continuous function and we have
defined F to belong to the convex, compact set [0, A]|| and G (.) also maps into
[0, A]|| by the assumption that A > maxξi ∈ U Pi . 


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 886 F. Albornoz et al.

Appendix 3: Proof of Proposition 4

Under the assumption that ∂ ∂ H

∂θξ = ∂θξ = 0 and we only look at individuals within
NA

the same skill group, i.e., individuals are homogeneous in wages, we need to calculate
the derivative of the left-hand side of (21) with respect to parental motivation and
determine its sign. This derivative is given by
 c 
wu A − wuc H
 2  c 2
wscA − wuc A ws H − wuc H
+ θi p − p
w Ai w Hi
  
 c 2 2 θ T
 A (F)  2 2 θ HT  H (F)
+ ws A − wuc A A
− − w c
s − w c
u − ,
3 w TA 3 H H
3 w TH 3

Using the link between school and parental motivation, the last line can become
  
1  c 
c 2 2k A
 c 
c 2 2k A
ws A − wu A θ A −  A − w s H − wu H θH − H
3 w TA w TA

so that the derivative can be rewritten as

 2  c 2
wscA − wuc A ws H − wuc H
θi p − p
w Ai w Hi
  
  1  c 
c 2 2k A
 c 
c 2 2k A
+ wuc A − wu H +
c
ws A − wu A θ A −  A − ws H − wu H θH − H
3 w TA w TA

It is positive if both lines are positive which gives us conditions (22) and (23). If both
(22) and (23) are violated, the derivative is negative. If (22) is violated and (23) holds,
the derivative is positive for sufficiently small θi and negative for sufficiently high θi .
Hence, (21) reaches its maximum for some intermediate value of θi . Finally, if (22)
holds and (23) is violated, the derivative first decreases in θi and then increases in θi .
Hence, (21) reaches its minimum for some intermediate value of θi . 


Appendix 4: Proof of Lemma 4

Using the first order conditions for children’s effort decision (6), we get:
⎛ ⎞
MN MI
θ T ⎝  c    c c  cI + c c ⎠
UT = ws − wuc c N
pk + c T + w c +
u w s − w u pl T + w u
M
k=1 l=1
⎛ ⎛ ⎞⎞
MN
 MI
⎝ 1 ⎝
+ T− cT N
c pk + cT + c pl + cT ⎠⎠ w T .
I
2r M
k=1 l=1

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 Immigration and the school system 887

Hence
⎛ ⎞ ⎛ ⎛ ⎞ ⎞
MN MI MN MI
∂U T θ T ⎝  c    c  1   wT
= c
ws − wu + ws − w u ⎠ − ⎝ ⎝
c N
c pk + c pl ⎠ + McT ⎠
I = 0.
∂cT M 2 Mr
k=1 l=1 k=1 l=1

So
rθT  c  M N c Np + M I c Ip
cT = w s − w u −
c
, (44)
wT 2M
For parents, the only change now is that school resources cost money which they will
have to pay from general taxation, but given the quasi-linearity in income of utility
and that taxation is already decided at the time parents choose their effort, the amount
of those taxes do not affect the parental effort decision. Hence,

j θi  c  1
c pi = ws − wuc − cT for j = N ; I. (45)
w i
p 2

Similar calculations as in Lemma 1 yield the desired result.

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