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Equilibria and efficiency in bilingual labour markets

Listed author(s):
  • Armstrong, Alex

We consider a labour market where two languages are commonly in use and each individual may make a costly investment to learn the language which is not his or her mother tongue. Language skills are productive in a human capital sense and can also be used to signal unobservable traits to employers. Due to the informational asymmetry between workers and employees, the equilibrium rate of bilingualism in the economy may exceed the socially efficient level. On the other hand, the spillovers associated with second language acquisition may imply there is not enough bilingualism relative to the social optimum. We consider the circumstances under which either the signalling or the network welfare effects dominate in equilibrium. Depending on the parameter values of the model, policies of either encouraging or discouraging the investment in language skills may be welfare enhancing.

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File URL: http://www.sciencedirect.com/science/article/pii/S0167268115000359
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Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 112 (2015)
Issue (Month): C ()
Pages: 204-220

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Handle: RePEc:eee:jeborg:v:112:y:2015:i:c:p:204-220
DOI: 10.1016/j.jebo.2015.01.011
Contact details of provider: Web page: http://www.elsevier.com/locate/jebo

References listed on IDEAS
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  1. David Albouy, 2008. "The wage gap between Francophones and Anglophones: a Canadian perspective, 1970-2000," Canadian Journal of Economics, Canadian Economics Association, vol. 41(4), pages 1211-1238, November.
  2. Kevin Lang, 1986. "A Language Theory of Discrimination," The Quarterly Journal of Economics, Oxford University Press, vol. 101(2), pages 363-382.
  3. Ginsburgh, Victor & Ortuño-Ortín, Ignacio & Weber, Shlomo, 2007. "Learning foreign languages: Theoretical and empirical implications of the Selten and Pool model," Journal of Economic Behavior & Organization, Elsevier, vol. 64(3-4), pages 337-347.
  4. Andrew Henley & Rhian Eleri Jones, 2005. "Earnings And Linguistic Proficiency In A Bilingual Economy," Manchester School, University of Manchester, vol. 73(3), pages 300-320, 06.
  5. Calvin J. Veltman & Jac-Andre Boulet & Charles Castonguay, 1979. "The Economic Context of Bilingualism and Language Transfer in the Montreal Metropolitan Area," Canadian Journal of Economics, Canadian Economics Association, vol. 12(3), pages 468-479, August.
  6. Michael Spence, 1981. "Signaling, Screening, and Information," NBER Chapters,in: Studies in Labor Markets, pages 319-358 National Bureau of Economic Research, Inc.
  7. Sílvio Rendon, 2007. "The Catalan premium: language and employment in Catalonia," Journal of Population Economics, Springer;European Society for Population Economics, vol. 20(3), pages 669-686, July.
  8. Jeffrey Church & Ian King, 1993. "Bilingualism and Network Externalities," Canadian Journal of Economics, Canadian Economics Association, vol. 26(2), pages 337-345, May.
  9. Gabszewicz Jean J. & Ginsburgh Victor A. & Laussel Didier & Weber Shlomo, 2011. "Foreign Languages Acquisition: Self-Learning and Language Schools," Review of Network Economics, De Gruyter, vol. 10(1), pages 1-22, March.
  10. repec:adr:anecst:y:2011:i:101-102:p:13 is not listed on IDEAS
  11. Daniel M. Shapiro & Morton Stelcner, 1981. "Male-Female Earnings Differentials and the Role of Language in Canada, Ontario, and Quebec, 1970," Canadian Journal of Economics, Canadian Economics Association, vol. 14(2), pages 341-348, May.
  12. Serge Nadeau, 2010. "Another Look at the Francophone Wage Gap in Canada: Public and Private Sectors, Quebec and Outside Quebec," Canadian Public Policy, University of Toronto Press, vol. 36(2), pages 159-179, June.
  13. Edward P. Lazear, 1999. "Culture and Language," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages 95-126, December.
  14. Gilles Grenier, 1987. "Earnings by Language Group in Quebec in 1980 and Emigration from Quebec between 1976 and 1981," Canadian Journal of Economics, Canadian Economics Association, vol. 20(4), pages 774-791, November.
  15. 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.
  16. Garrouste, Christelle, 2008. "Language Skills and Economic Returns," MPRA Paper 25069, University Library of Munich, Germany.
  17. Morton Stelcner & Daniel M. Shapiro, 1997. "Language and Earnings in Quebec: Trends over Twenty Years, 1970-1990," Canadian Public Policy, University of Toronto Press, vol. 23(2), pages 115-140, June.
  18. Louis N. Christofides & Robert Swidinsky, 2010. "The Economic Returns to the Knowledge and Use of a Second Official Language: English in Quebec and French in the Rest-of-Canada," Canadian Public Policy, University of Toronto Press, vol. 36(2), pages 137-158, June.
  19. David Albouy, 2008. "The Wage Gap between Francophones and Anglophones: A Canadian Perspective, 1970 to 2000," NBER Working Papers 14203, National Bureau of Economic Research, Inc.
  20. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
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