We consider that an immigrant has a portfolio of human capital consisting of education, work\nexperience and languages and each asset is characterized by a risk and a return. The approach\nof Mincer (1974) was adopted and the effect of the similarity between Canada and the country\nof origin on salary was taken into account to determine the returns of these various\ncomponents of human capital. Then, the methodology of Pereira and Martins (2002) was used\nto assess the risks associated with human capital, i.e. the risk for an individual to be in the\nlower part of the income distribution. The results indicate that human capital is not perfectly\ntransferable and show that the relationship between risk and return is similar to that relating\nto financial assets: it is negative for assets that represent insurance for their owners and\npositive for the others. In addition, the accumulation of work experience in Canada and similar\ncountries is accompanied by an increase in risk and a decrease in returns. Contrary to our\nexpectations, the results indicate that the risk does not decrease with education level.
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