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Returns to foreign languages of native workers in the EU

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  • GINSBURGH, Victor
  • PRIETO-RODRIGUEZ, Juan

Abstract

Most papers on returns to languages are concerned with immigrants. We use the European Community Household Panel Survey (ECHP) to infer returns on non-native languages by non-immigrants in nine countries of the European Union. We differ fromthe few other studies that deal with the same problem in three respects. First, we correct for time-dependent measurement errors in self-reporting as suggested by Dustmann and Van Soest and find that the resulting IV estimates are much larger than those obtained by OLS. We also suggest that there is little room for time-persistent errors and heterogeneity, and that therefore our estimates should not suffer from the other usual biases. Secondly, instead of using a dummy for each language, we use the ratio of the population that is not proficient in a language in each country considered. Finally, we estimate instrumental variable quantile regressions to illustrate how returns to languages vary at different points of the distribution of earnings.

Suggested Citation

  • GINSBURGH, Victor & PRIETO-RODRIGUEZ, Juan, 2007. "Returns to foreign languages of native workers in the EU," CORE Discussion Papers 2007021, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvco:2007021
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    File URL: http://www.uclouvain.be/cps/ucl/doc/core/documents/coredp2007_21.pdf
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    References listed on IDEAS

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    1. Alastair R. Hall & Fernanda P. M. Peixe, 2003. "A Consistent Method for the Selection of Relevant Instruments," Econometric Reviews, Taylor & Francis Journals, vol. 22(3), pages 269-287, January.
    2. Martins, Pedro S. & Pereira, Pedro T., 2004. "Does education reduce wage inequality? Quantile regression evidence from 16 countries," Labour Economics, Elsevier, vol. 11(3), pages 355-371, June.
    3. 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.
    4. Moshe Buchinsky, 1998. "Recent Advances in Quantile Regression Models: A Practical Guideline for Empirical Research," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 88-126.
    5. John E. DiNardo & Jörn-Steffen Pischke, 1997. "The Returns to Computer Use Revisited: Have Pencils Changed the Wage Structure Too?," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 291-303.
    6. Williams, Donald R., 2006. "The Economic Returns to Multiple Language Usage in Western Europe," IRISS Working Paper Series 2006-07, IRISS at CEPS/INSTEAD.
    7. Abbott, Michael G & Beach, Charles M, 1992. "Immigrant Earnings Differentials in Canada: A More General Specification of Age and Experience Effects," Empirical Economics, Springer, vol. 17(2), pages 221-238.
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    Cited by:

    1. Melitz, Jacques & Toubal, Farid, 2014. "Native language, spoken language, translation and trade," Journal of International Economics, Elsevier, vol. 93(2), pages 351-363.
    2. Brindusa Anghel & Antonio Cabrales & Jesus M. Carro, 2016. "Evaluating A Bilingual Education Program In Spain: The Impact Beyond Foreign Language Learning," Economic Inquiry, Western Economic Association International, vol. 54(2), pages 1202-1223, April.
    3. Jan Fidrmuc & Jarko Fidrmuc, 2009. "Foreign Languages and Trade," CEDI Discussion Paper Series 09-03, Centre for Economic Development and Institutions(CEDI), Brunel University.
    4. Melitz, Jacques, 2012. "A framework for analyzing language and welfare," CEPR Discussion Papers 9091, C.E.P.R. Discussion Papers.
    5. repec:edn:sirdps:417 is not listed on IDEAS
    6. Antonio di Paolo, 2011. "Knowledge of catalan, public/prívate sector choice and earnings: Evidence from a double sample selection model," Hacienda Pública Española, IEF, vol. 197(2), pages 9-35, June.

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