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Returns to Local and Foreign Language Skills – Causal Evidence from Spain

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  • Ingo Isphording

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Abstract

This study examines the returns to foreign and local language skills of immigrants in the Spanish labor market. Different sources of endogeneity are addressed by deriving a set of novel instruments for language proficiency through a measure of linguistic dissimilarity. Using cross-sectional data from the 2007 National Immigrant Survey of Spain (NISS), returns to language skills are estimated separately for Spanish, English, German and French proficiency. Foreign language proficiency produces high returns, which appear to be mediated through the channel of occupational choice. The results are discussed against the background of a severe foreign language skills shortage in the Spanish economy. Immigrants may deal as a supplier of foreign language proficiency in the short run. In contrast to most studies, I find no compelling evidence of a wage premium for local language profiiency.

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Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0398.

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Length: 33 pages
Date of creation: Jan 2013
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Handle: RePEc:rwi:repape:0398

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Keywords: Language skills; migration; human capital; linguistic distance; instrumental variable;

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  1. McManus, Walter & Gould, William & Welch, Finis, 1983. "Earnings of Hispanic Men: The Role of English Language Proficiency," Journal of Labor Economics, University of Chicago Press, vol. 1(2), pages 101-30, April.
  2. Dustmann, Christian & van Soest, Arthur, 1998. "Language and the Earnings of Immigrants," CEPR Discussion Papers 2012, C.E.P.R. Discussion Papers.
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  9. Barry R Chiswick & Paul W Miller, 2007. "Occupational Language Requirements and the Value of English in the US Labor Market," Economics Discussion / Working Papers 07-06, The University of Western Australia, Department of Economics.
  10. Ingo E. Isphording & Sebastian Otten, 2012. "The Costs of Babylon – Linguistic Distance in Applied Economics," Ruhr Economic Papers 0337, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
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  14. Williams, Donald R., 2006. "The Economic Returns to Multiple Language Usage in Western Europe," IRISS Working Paper Series 2006-07, IRISS at CEPS/INSTEAD.
  15. Ku, Hyejin & Zussman, Asaf, 2010. "Lingua franca: The role of English in international trade," Journal of Economic Behavior & Organization, Elsevier, vol. 75(2), pages 250-260, August.
  16. Hoyt Bleakley & Aimee Chin, 2004. "Language Skills and Earnings: Evidence from Childhood Immigrants," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 481-496, May.
  17. Ott Toomet, 2011. "Learn English, Not the Local Language! Ethnic Russians in the Baltic States," American Economic Review, American Economic Association, vol. 101(3), pages 526-31, May.
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  19. Garrouste, Christelle, 2008. "Language Skills and Economic Returns," MPRA Paper 25069, University Library of Munich, Germany.
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