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This article develops a model of the occupational mobility of immigrants and tests the hypotheses using data on males from the Longitudinal Survey of Immigrants to Australia, Panel I. The theoretical model generates hypotheses regarding a U‐shaped pattern of occupational mobility from the “last job” in the origin, to the “first job” in the destination, to subsequent jobs in the destination, and regarding the depth of the “U.” The survey includes data on pre‐immigration occupation, the “first” occupation in Australia (at six months) and the occupation after about three‐and‐a‐half years in Australia. The hypotheses are supported by the empirical analysis.

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This paper is concerned with why immigrants appear to have consistently lower partial effects of schooling on earnings than the native born, both across destinations and in different time periods within countries. It uses the Over-Required-Under education approach to occupations, a new decomposition technique developed especially for this approach, and data from the 2000 Census of Population of the United States.Based on the average (mode or mean) level of schooling in their occupation, the schooling of the native and foreign born adult men is divided into the "required" (average) level, and years of under-or over-education. Immigrants have a wider variance in schooling, with an especially large proportion undereducated given the average schooling level in their occupation.Immigrants are shown to receive approximately the same rate of return to the "required" (occupational norm) level of education, but experience a smaller negative effect of years of undereducation, and to a lesser extent a smaller positive effect of overeducation.About two-thirds of the smaller effect of schooling on earnings for immigrants is due to their different payoffs to undereducation and overeducation. The remainder is largely due to their different distribution of years of schooling. The country-of-origin differences in the returns to under-and over-education are consistent with country differences in the international transferability of skills to the US and the favorable selectivity of economic migrants, especially those from countries other than the English-speaking developed countries. The decomposition developed is used to quantify the contribution of favorable selection in immigration and the less-than-perfect international transferability of skills. The results suggest that favorable selection is the more important contributor to the smaller payoff to schooling for immigrants. Moreover, the strong patterns found across countries of origin suggest that the decomposition proposed is robust.

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