IDEAS home Printed from https://ideas.repec.org/a/bla/revinw/v64y2018i3p592-625.html
   My bibliography  Save this article

Literacy and the Migrant–Native Wage Gap

Author

Listed:
  • Oliver Himmler
  • Robert Jäckle

Abstract

Being able to read and write is one of the most important skills in modern economies. Literacy frequently is a prerequisite for employment and its relevance for productivity and wages is magnified by the fact that it is only through literacy that many other skills become usable. More so than for natives, this argument applies to migrants: even those with high levels of human capital acquired in the country of origin often have it rendered worthless by the absence of literacy in the host‐country language. Using novel data from a large‐scale German adult literacy test (“leo.—Level‐One Studie”, or “LEO”), we investigate the determinants of literacy and show that migrants have systematically lower language skills than natives. We find that any observed raw employment and wage gaps between natives and migrants can be fully explained by these differences.

Suggested Citation

  • Oliver Himmler & Robert Jäckle, 2018. "Literacy and the Migrant–Native Wage Gap," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(3), pages 592-625, September.
  • Handle: RePEc:bla:revinw:v:64:y:2018:i:3:p:592-625
    DOI: 10.1111/roiw.12299
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/roiw.12299
    Download Restriction: no

    File URL: https://libkey.io/10.1111/roiw.12299?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Miranda, Alfonso & Zhu, Yu, 2013. "English deficiency and the native–immigrant wage gap," Economics Letters, Elsevier, vol. 118(1), pages 38-41.
    2. McIntosh, Steven & Vignoles, Anna, 2001. "Measuring and Assessing the Impact of Basic Skills on Labour Market Outcomes," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 453-481, July.
    3. Christian Dustmann & Arthur van Soest, 2001. "Language Fluency And Earnings: Estimation With Misclassified Language Indicators," The Review of Economics and Statistics, MIT Press, vol. 83(4), pages 663-674, November.
    4. Mattoo, Aaditya & Neagu, Ileana Cristina & Özden, Çaglar, 2008. "Brain waste? Educated immigrants in the US labor market," Journal of Development Economics, Elsevier, vol. 87(2), pages 255-269, October.
    5. Bell, Brian D, 1997. "The Performance of Immigrants in the United Kingdom: Evidence from the GHS," Economic Journal, Royal Economic Society, vol. 107(441), pages 333-344, March.
    6. Yann Algan & Christian Dustmann & Albrecht Glitz & Alan Manning, 2010. "The Economic Situation of First and Second-Generation Immigrants in France, Germany and the United Kingdom," Economic Journal, Royal Economic Society, vol. 120(542), pages 4-30, February.
    7. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66, pages 281-281.
    8. Eric A. Hanushek & Ludger Woessmann, 2008. "The Role of Cognitive Skills in Economic Development," Journal of Economic Literature, American Economic Association, vol. 46(3), pages 607-668, September.
    9. Isphording, Ingo E. & Otten, Sebastian, 2014. "Linguistic barriers in the destination language acquisition of immigrants," Journal of Economic Behavior & Organization, Elsevier, vol. 105(C), pages 30-50.
    10. Denny, K-J & Harmon, C-P & Roche, M-J, 1997. "The Distribution of Discrimination in Immigrant Earnings : Evidence from Britain 1974-1993," Papers 97/21, College Dublin, Department of Political Economy-.
    11. Christian Dustmann & Francesca Fabbri, 2003. "Language proficiency and labour market performance of immigrants in the UK," Economic Journal, Royal Economic Society, vol. 113(489), pages 695-717, July.
    12. Carl Sanders & Rebecca Lessem, 2013. "The Native-Immigrant Wage Gap in the United States," 2013 Meeting Papers 1206, Society for Economic Dynamics.
    13. Barry R. Chiswick & Paul W. Miller, 2012. "Negative and Positive Assimilation, Skill Transferability, and Linguistic Distance," Journal of Human Capital, University of Chicago Press, vol. 6(1), pages 35-55.
    14. Geoffrey Carliner, 1981. "Wage Differences by Language Group and the Market for Language Skills in Canada," Journal of Human Resources, University of Wisconsin Press, vol. 16(3), pages 384-399.
    15. Anna Vignoles & Augustin De Coulon & Oscar Marcenaro-Gutierrez, 2011. "The value of basic skills in the British labour market," Oxford Economic Papers, Oxford University Press, vol. 63(1), pages 27-48, January.
    16. Ross Finnie & Ronald Meng, 2005. "Literacy and labour market outcomes: self-assessment versus test score measures," Applied Economics, Taylor & Francis Journals, vol. 37(17), pages 1935-1951.
    17. Isphording, Ingo E., 2014. "Disadvantages of linguistic origin—Evidence from immigrant literacy scores," Economics Letters, Elsevier, vol. 123(2), pages 236-239.
    18. William Fellner, 1978. "Contemporary Economic Problems, 1978," Books, American Enterprise Institute, number 918290, September.
    19. Kaas Leo & Manger Christian, 2012. "Ethnic Discrimination in Germany’s Labour Market: A Field Experiment," German Economic Review, De Gruyter, vol. 13(1), pages 1-20, February.
    20. Rachel M. Friedberg, 2001. "The Impact of Mass Migration on the Israeli Labor Market," The Quarterly Journal of Economics, Oxford University Press, vol. 116(4), pages 1373-1408.
    21. Robert Jäckle & Oliver Himmler, 2010. "Health and Wages: Panel Data Estimates Considering Selection and Endogeneity," Journal of Human Resources, University of Wisconsin Press, vol. 45(2).
    22. Maresa Sprietsma, 2013. "Discrimination in grading: experimental evidence from primary school teachers," Empirical Economics, Springer, vol. 45(1), pages 523-538, August.
    23. Chiswick, Barry R & Miller, Paul W, 1995. "The Endogeneity between Language and Earnings: International Analyses," Journal of Labor Economics, University of Chicago Press, vol. 13(2), pages 246-288, April.
    24. Cristian Bartolucci, 2010. "Understanding the Native-Immigrant Wage Gap Using Matched Employer-Employee Data. Evidence from Germany," Carlo Alberto Notebooks 150, Collegio Carlo Alberto.
    25. Christian Dustmann & Tommaso Frattini & Ian P. Preston, 2013. "The Effect of Immigration along the Distribution of Wages," Review of Economic Studies, Oxford University Press, vol. 80(1), pages 145-173.
    26. Aldashev Alisher & Gernandt Johannes & Thomsen Stephan L., 2012. "The Immigrant-Native Wage Gap in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 232(5), pages 490-517, October.
    27. Dustmann, Christian & Glitz, Albrecht, 2011. "Migration and Education," Handbook of the Economics of Education, in: Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), Handbook of the Economics of Education, edition 1, volume 4, chapter 0, pages 327-439, Elsevier.
    28. Christian Dustmann & Arthur Van Soest, 2002. "Language and the Earnings of Immigrants," ILR Review, Cornell University, ILR School, vol. 55(3), pages 473-492, April.
    29. Coulombe Serge & Tremblay Jean-François, 2006. "Literacy and Growth," The B.E. Journal of Macroeconomics, De Gruyter, vol. 6(2), pages 1-34, August.
    30. Dustmann, Christian, 1994. "Speaking Fluency, Writing Fluency and Earnings of Migrants," Journal of Population Economics, Springer;European Society for Population Economics, vol. 7(2), pages 133-156.
    31. Chiswick, Barry R, 1978. "The Effect of Americanization on the Earnings of Foreign-born Men," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 897-921, October.
    32. Chiswick, Barry R, 1991. "Speaking, Reading, and Earnings among Low-Skilled Immigrants," Journal of Labor Economics, University of Chicago Press, vol. 9(2), pages 149-170, April.
    33. Borjas, George J, 1985. "Assimilation, Changes in Cohort Quality, and the Earnings of Immigrants," Journal of Labor Economics, University of Chicago Press, vol. 3(4), pages 463-489, October.
    34. 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.
    35. Dustmann, C, 1993. "Earnings Adjustment of Temporary Migrants," Journal of Population Economics, Springer;European Society for Population Economics, vol. 6(2), pages 153-168, May.
    36. Chiswick, Barry R., 2016. ""Tongue Tide": The Economics of Language Offers Important Lessons for How Europe Can Best Integrate Migrants," IZA Policy Papers 113, Institute of Labor Economics (IZA).
    37. Ana Ferrer & David A. Green & W. Craig Riddell, 2006. "The Effect of Literacy on Immigrant Earnings," Journal of Human Resources, University of Wisconsin Press, vol. 41(2).
    38. Brian Junker & Lynne Schofield & Lowell Taylor, 2012. "The use of cognitive ability measures as explanatory variables in regression analysis," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 1(1), pages 1-19, December.
    39. George J. Borjas, 2021. "Assimilation, Changes in Cohort Quality, and the Earnings of Immigrants," World Scientific Book Chapters, in: Foundational Essays in Immigration Economics, chapter 2, pages 3-29, World Scientific Publishing Co. Pte. Ltd..
    40. Chiswick, Barry R, 1980. "The Earnings of White and Coloured Male Immigrants in Britain," Economica, London School of Economics and Political Science, vol. 47(185), pages 81-87, February.
    41. Green, David A. & Craig Riddell, W., 2003. "Literacy and earnings: an investigation of the interaction of cognitive and unobserved skills in earnings generation," Labour Economics, Elsevier, vol. 10(2), pages 165-184, April.
    42. Costas Azariadis & Allan Drazen, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, Oxford University Press, vol. 105(2), pages 501-526.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ek, Simon & Hammarstedt, Mats & Skedinger, Per, 2021. "Low-Skilled Jobs, Language Proficiency and Refugee Integration: An Experimental Study," Working Paper Series 1398, Research Institute of Industrial Economics.
    2. Fays, Valentine & Mahy, Benoît & Rycx, François, 2021. "Wage Differences According to Workers' Origin: The Role of Working More Upstream in GVCs," GLO Discussion Paper Series 918, Global Labor Organization (GLO).
    3. Andrej Cupak & Pavel Ciaian & d'Artis Kancs, 2021. "Comparing the Immigrant-Native Pay Gap: A Novel Evidence from Home and Host Countries," LIS Working papers 810, LIS Cross-National Data Center in Luxembourg.
    4. Samuel Vézina & Alain Bélanger, 2020. "Literacy Skills as an Explanation for Labor Market Imbalances by Occupational Type in Canada: Microsimulation Projections for 2014–2024," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 39(6), pages 1019-1049, December.
    5. Pieroni, Luca & d'Agostino, Giorgio & Lanari, Donatella & Scarlato, Margherita, 2022. "Immigrant labour market outcomes: new insights from a lack of language proficiency in Italy," MPRA Paper 111991, University Library of Munich, Germany.
    6. Valentine Fays & Benoît Mahy & François Rycx & Mélanie Volral, 2021. "Wage discrimination based on the country of birth: do tenure and product market competition matter?," Applied Economics, Taylor & Francis Journals, vol. 53(13), pages 1551-1571, March.
    7. Valentine Jacobs & François Rycx & Mélanie Volral, 2022. "Does Over-Education Raise Productivity And Wages Equally ? The Moderating Role Of Workers’ Origin And Immigrants’ Background," LIDAM Discussion Papers IRES 2022003, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    8. Claudio Fassio & Sona Kalantaryan & Alessandra Venturini, 2020. "Foreign Human Capital and Total Factor Productivity: A Sectoral Approach," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 66(3), pages 613-646, September.
    9. Jacobs, Valentine & Rycx, François & Volral, Mélanie, 2022. "Does Over-education Raise Productivity and Wages Equally? The Moderating Role of Workers' Origin and Immigrants' Background," GLO Discussion Paper Series 1044, Global Labor Organization (GLO).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dustmann, Christian & Glitz, Albrecht, 2011. "Migration and Education," Handbook of the Economics of Education, in: Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), Handbook of the Economics of Education, edition 1, volume 4, chapter 0, pages 327-439, Elsevier.
    2. Jens Ruhose, 2015. "Microeconometric Analyses on Economic Consequences of Selective Migration," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 61, September.
    3. De Paola, Maria & Brunello, Giorgio, 2016. "Education as a Tool for the Economic Integration of Migrants," IZA Discussion Papers 9836, Institute of Labor Economics (IZA).
    4. Mehtap Akguc & Ana Ferrer, 2015. "Educational Attainment and Labor Market Performance: An Analysis of Immigrants in France," Working Papers 1505, University of Waterloo, Department of Economics, revised Feb 2015.
    5. Euwals, Rob & Dagevos, Jaco & Gijsberts, Mérove & Roodenburg, Hans, 2007. "The Labour Market Position of Turkish Immigrants in Germany and the Netherlands: Reason for Migration, Naturalisation and Language Proficiency," IZA Discussion Papers 2683, Institute of Labor Economics (IZA).
    6. Chiswick, Barry R. & Miller, Paul W., 2014. "International Migration and the Economics of Language," IZA Discussion Papers 7880, Institute of Labor Economics (IZA).
    7. Isphording, Ingo E. & Otten, Sebastian, 2014. "Linguistic barriers in the destination language acquisition of immigrants," Journal of Economic Behavior & Organization, Elsevier, vol. 105(C), pages 30-50.
    8. Aldashev, Alisher & Gernandt, Johannes & Thomsen, Stephan L., 2009. "Language usage, participation, employment and earnings: Evidence for foreigners in West Germany with multiple sources of selection," Labour Economics, Elsevier, vol. 16(3), pages 330-341, June.
    9. Bedaso, Fenet, 2021. "The Labor Market Integration of Refugees and other Migrants in Germany," GLO Discussion Paper Series 884, Global Labor Organization (GLO).
    10. Sari Pekkala Kerr & William R. Kerr, 2011. "Economic Impacts of Immigration: A Survey," Finnish Economic Papers, Finnish Economic Association, vol. 24(1), pages 1-32, Spring.
    11. repec:zbw:rwirep:0274 is not listed on IDEAS
    12. Zorlu, Aslan & Hartog, Joop, 2018. "The Impact of Language on Socioeconomic Integration of Immigrants," IZA Discussion Papers 11485, Institute of Labor Economics (IZA).
    13. Sweetman, A. & van Ours, J.C., 2014. "Immigration : What About the Children and Grandchildren?," Discussion Paper 2014-009, Tilburg University, Center for Economic Research.
    14. Lang Kevin & Siniver Erez, 2009. "The Return to English in a Non-English Speaking Country: Russian Immigrants and Native Israelis in Israel," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 1-30, November.
    15. Jaschke, Philipp & Keita, Sekou, 2019. "Say it like Goethe: Language learning facilities abroad and the self-selection of immigrants," IAB-Discussion Paper 201914, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    16. Rob Euwals & Hans Roodenburg & J. Dagevos & M. Gijsberts, 2007. "The labour market position of Turkish immigrants in Germany and the Netherlands; reason for migration, naturalisation and language proficiency," CPB Discussion Paper 79, CPB Netherlands Bureau for Economic Policy Analysis.
    17. Lemos, Sara, 2017. "Mind the gap: A detailed picture of the immigrant-native earnings gap in the UK using longitudinal data between 1978 and 2006," Regional Science and Urban Economics, Elsevier, vol. 63(C), pages 57-75.
    18. Morgan Raux, 2021. "Cultural differences and immigrants' wages," DEM Discussion Paper Series 21-02, Department of Economics at the University of Luxembourg.
    19. Lang, Julia, 2018. "Employment effects of language training for unemployed immigrants," IAB-Discussion Paper 201821, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    20. Mary Antonia Silles, 2018. "The Effects of Language Skills on the Economic Assimilation of Female Immigrants in the United States," Manchester School, University of Manchester, vol. 86(6), pages 789-815, December.
    21. Euwals, Rob & Dagevos, Jaco & Gijsberts, Mérove & Roodenburg, Hans, 2007. "Immigration, Integration and the Labour Market: Turkish Immigrants in Germany and the Netherlands," IZA Discussion Papers 2677, Institute of Labor Economics (IZA).

    More about this item

    JEL classification:

    • 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
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:revinw:v:64:y:2018:i:3:p:592-625. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/iariwea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/iariwea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.