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

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  • Isphording, Ingo

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 proficiency.

Suggested Citation

  • Isphording, Ingo, 2013. "Returns to Local and Foreign Language Skills – Causal Evidence from Spain," Ruhr Economic Papers 398, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:398
    DOI: 10.4419/86788453
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    Citations

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    Cited by:

    1. Zorlu, Aslan & Hartog, Joop, 2018. "The Impact of Language on Socioeconomic Integration of Immigrants," IZA Discussion Papers 11485, Institute of Labor Economics (IZA).
    2. Zhou, Yonghong & Zhu, Rong & Zheng, Xian, 2020. "Second language skills and labor market outcomes: Evidence from the handover of Hong Kong," China Economic Review, Elsevier, vol. 59(C).
    3. Bia, Michela & Flores-Lagunes, Alfonso & Mercatanti, Andrea, 2018. "Evaluation of Language Training Programs in Luxembourg using Principal Stratification," GLO Discussion Paper Series 289, Global Labor Organization (GLO).
    4. Santiago Budría & Alberto Colino & Carlos Martínez de Ibarreta, 2019. "The impact of host language proficiency on employment outcomes among immigrants in Spain," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 46(4), pages 625-652, November.
    5. Matthias Huber & Ann-Marie Sommerfeld & Silke Uebelmesser, 2022. "Language learning: human capital investment or consumption?," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 49(4), pages 897-948, November.
    6. Maria Medvedeva & Alejandro Portes, 2017. "Immigrant Bilingualism in Spain: An Asset or a Liability? Support for the surveys on which this study is based was provided by successive grants from the Spencer Foundation, the Ministry of Science an," International Migration Review, Wiley Blackwell, vol. 51(3), pages 632-666, September.
    7. Wang, Haining & Cheng, Zhiming & Smyth, Russell, 2016. "Language and consumption," China Economic Review, Elsevier, vol. 40(C), pages 135-151.
    8. Ramon Caminal & Antonio Di Paolo, 2015. "Your language or mine?," Working Papers XREAP2015-05, Xarxa de Referència en Economia Aplicada (XREAP), revised Nov 2015.
    9. Dale-Olsen, Harald & Finseraas, Henning, 2020. "Linguistic diversity and workplace productivity," Labour Economics, Elsevier, vol. 64(C).
    10. Hahm, Sabrina & Gazzola, Michele, 2022. "The Value of Foreign Language Skills in the German Labor Market," Labour Economics, Elsevier, vol. 76(C).
    11. Alejandro Donado, 2017. "Foreign Languages and their Impact on Unemployment," LABOUR, CEIS, vol. 31(3), pages 265-287, September.
    12. Wang, Haining & Smyth, Russell & Cheng, Zhiming, 2017. "The economic returns to proficiency in English in China," China Economic Review, Elsevier, vol. 43(C), pages 91-104.
    13. Dale-Olsen, Harald & Finseraas, Henning, 2019. "Linguistic Diversity and Workplace Productivity," IZA Discussion Papers 12621, Institute of Labor Economics (IZA).
    14. Zhiling Wang & Thomas de Graaff & Peter Nijkamp, 2018. "Barriers of Culture, Networks, and Language in International Migration: A Review," REGION, European Regional Science Association, vol. 5, pages 73-89.
    15. Zhiling Wang & Thomas de Graaff & Peter Nijkamp, 2023. "Differences in Heterogeneous Returns to Foreign Language Use at Work Among Natives and Migrants in Europe," Romanian Journal of Regional Science, Romanian Regional Science Association, vol. 17(1), pages 1-37, June.

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    More about this item

    Keywords

    language skills; migration; human capital; linguistic distance; instrumental variable;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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