“Language of Instruction, Bilingualism, and Neighbourhood Quality: Do Local Language Skills Matter?”

This paper investigates whether acquiring proficiency in a local language improves neighbourhood quality in a bilingual region, focusing on Catalonia, Spain. The analysis uses rich microdata linked to census-tract measures of neighbourhood quality, including average local income, unemployment benefits per capita, and a composite socioeconomic status index. OLS results show that oral proficiency in Catalan among native Spanish speakers is associated with better residential outcomes. To address potential endogeneity of language skills, I exploit the implementation of a language-ineducation policy that introduced Catalan as a medium of instruction, promoting Catalan-Spanish bilingualism among native Spanish speakers. Specifically, I construct an instrument consisting in the interaction between years of language exposure during compulsory education and an indicator for native Spanish speakers, considering that the reform did not affect oral Catalan proficiency among native Catalan speakers and assuming cohort trends unrelated to the reform are homogeneous across language groups. IV/TSLS estimates reveal no causal effect of increased oral Catalan skills, induced by school language exposure among native Spanish speakers, on any measure of neighbourhood quality. Falsification exercises aimed at validating the main identification assumption, along with robustness checks addressing potential confounders and alternative mechanisms, support the identification strategy and reinforce the main findings. Overall, the results suggest that although the reform significantly raised oral Catalan proficiency among native Spanish speakers, this variation in language skills does not translate into changes in residential sorting or neighbourhood quality.