Three essays on immigration and finance

International immigration is one of the most important issues of our time. My dissertation attempts to analyze its importance for financial flows and international investments.; In my first essay, I examine the interdependency between capital flows and immigration flows. Capital and labor are the primary components of country growth models. Little, however, is known about the empirical transitional dynamics and interdependency between capital flows and immigration flows. Are they substitutes or complements? Do they move contemporaneously across borders, or is there a lead-lag relationship? This paper attempts to answer empirically these questions. I find, surprisingly, that labor not only moves in the same direction as capital, but it also leads capital. This relation is stronger for foreign direct investment flows than for international portfolio flows. Results are consistent for various countries, periods and migration flow specifications. Thus, the paper suggests that an important predictive variable for international capital flows is immigration flows.; My second essay explores three hypotheses that might potentially explain why labor leads capital across borders: the "dual scarcity" hypothesis (both move to countries where a dual scarcity exists), the "remittance signaling" hypothesis (labor moves first, signals with remittances, and capital follows), and the "multinational business practices" hypothesis (multinationals send their own country people before sending capital). Using a newly constructed data set, I cannot provide evidence in favor of any of these three hypotheses. The puzzle as to why capital follows people across borders remains.; In my final essay, I use finance data to test whether the U.S. is a melting pot, where immigrants immediately assimilate, or whether the U.S. is a salad bowl, where immigrants retain their separate identities. I estimate the number of immigrants in the United States classified by their country of origin for 1980, 1990 and 2000 from census data. I find, both in cross-sectional tests and in panel data tests, that the size of the immigrant group from a country living in the U.S. is positively correlated with U.S. investments in that country. This national origin bias exists for both direct (FDI) as well as indirect (equity holdings) investments. The results continue to hold even after controlling for the "fundamentals" hypothesized to affect foreign investments. Interestingly, I find that the other economic geography variables of a country---physical distance from the U.S., race, language and religion---do not seem to affect U.S. investments in that country. The paper thus sheds light on an old debate---how fast do immigrants assimilate---using finance data.