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The wage premium from foreign language skills

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  • Jacek Liwiński

    (University of Warsaw)

Abstract

The globalisation of labour markets makes language skills one of the key competences required by employers nowadays. The purpose of this paper is to estimate the wage premium from the foreign language skills earned by Poles. Poles seem to be a good case study, because the Polish language is not used for international communication and as many as 58% of Poles command at least one foreign language. I use data from three waves (2012–2014) of the Human Capital Balance survey with a pooled sample of about 35,000 individuals. I estimate a wage equation with the Heckman correction for selection to employment and I check for robustness with propensity score matching. I find that the advanced command of a foreign language yields a wage premium of 11% on average. Interestingly, I find a much higher wage premium from proficiency in Spanish (32%), French (22%) or Italian (15%) than from proficiency in English (11%) or German (12%).

Suggested Citation

  • Jacek Liwiński, 2019. "The wage premium from foreign language skills," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 46(4), pages 691-711, November.
    • Handle: RePEc:kap:empiri:v:46:y:2019:i:4:d:10.1007_s10663-019-09459-0
    DOI: 10.1007/s10663-019-09459-0
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    More about this item

    Keywords

    Foreign language skills; Wage premium; Wage equation;
    All these keywords.

    JEL classification:

    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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