Language Skills and Earnings: Evidence from Childhood Immigrants*

Abstract

Research on the effect of language skills on earnings is complicated by the endogeneity of language skills. This study exploits the phenomenon that younger children learn languages more easily than older children to construct an instrumental variable for language proficiency. We find a significant positive effect of English proficiency on wages among adults who immigrated to the U.S. as children. Much of this impact appears to be mediated through education. Differences between non-English-speaking origin countries and English-speaking ones that might make immigrants from the latter a poor control group for nonlanguage age-at-arrival effects do not drive these findings. (JEL J61, J24, J31) 1

Language and Labor Market Success

“…Using data from the 1990 US Census, Bleakley and Chin (2004) focus on childhood immigrants in the US who arrived at an age younger than 17. Their identification relies on the so-called critical period of language acquisition, based on the empirical evidence of a decreasing ability to learn languages after reaching adolescence.…”

The Returns to Language Skills in the US Labor Market

“…At the same time, self-reported language skill measures are prone to substantial measurement error. Recent studies have typically employed instrumental variables to identify the effect of language skills on wages (Chiswick and Miller, 1995;Angrist and Lavy, 1997;Dustmann and van Soest, 2002;Bleakley and Chin, 2004).…”

“…Our analysis uses the empirical strategy of Bleakley and Chin (2004) (BC from hereon) as a starting point and extends it in several directions. First, we generalise their approach by exploiting the relationship between immigrants' duration of residence in the host country and language skills to construct a new instrument, which allows us to identify the causal effect of language skills on wages of both child and adult migrants in the US labor market.…”

The returns to occupational foreign language use: Evidence from Germany

“…economics research, investment banking) and many blue collar occupations, good host country language skills are essential in most countries. Dustmann and Soest (2002) as well as Bleakley and Chin (2004) demonstrate sizable returns to host-country language skills in Germany and the United States, respectively. Chiswick and Miller (2002) find that without host country language skills, returns to schooling as well as to labor market experience are very low.…”

“…Chiswick and Miller, 2002;Dustmann and Soest, 2002;Bleakley and Chin, 2004), few papers study the implications of foreign language skills for individuals' labor market outcomes. At the country level, Melitz (2008) finds common languages are associated with trade in a gravity framework.…”