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Language and the Earnings of Immigrants

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  • Dustmann, Christian
  • van Soest, Arthur

Abstract

A number of studies have established a positive effect of migrants' language proficiency on their productivity. It has been argued that these estimates are upward-biased because of the presence of unobserved heterogeneity. To obtain an accurate estimate of language effects is important since it has potentially important implications for migration policies. Using panel data on immigrants in Germany, we show that in self-reported measures of language proficiency measurement error is substantial. Our results suggest that measurement error is a more serious problem than unobserved heterogeneity, and that Least Squares underestimates the effect of speaking fluency on earnings.

Suggested Citation

  • Dustmann, Christian & van Soest, Arthur, 1998. "Language and the Earnings of Immigrants," CEPR Discussion Papers 2012, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:2012
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    Keywords

    endogeneity; International Migration; language;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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