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The Returns to English-Language Skills in India

Author Info

Listed author(s):
  • Azam, Mehtabul

    ()

    (Oklahoma State University)

  • Chin, Aimee

    ()

    (University of Houston)

  • Prakash, Nishith

    ()

    (University of Connecticut)

Abstract

India's colonial legacy and linguistic diversity give English an important role in its economy, and this role has expanded due to globalization in recent decades. It is widely believed that there are sizable economic returns to English-language skills in India, but the extent of these returns is unknown due to lack of a microdata set containing measures of both earnings and English ability. In this paper, we use a newly available data set – the India Human Development Survey, 2005 – to quantify the effects of English-speaking ability on wages. We find that being fluent in English (compared to not speaking any English) increases hourly wages of men by 34%, which is as much as the return to completing secondary school and half as much as the return to completing a Bachelor’s degree. Being able to speak a little English significantly increases male hourly wages 13%. There is considerable heterogeneity in returns to English. More experienced and more educated workers receive higher returns to English. The complementarity between English skills and education appears to have strengthened over time. Only the more educated among young workers earn a premium for English skill, whereas older workers across all education groups do.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4802.

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Length: 35 pages
Date of creation: Mar 2010
Publication status: published in: Economic Development and Cultural Change, 2013, 61 (2), 335-367
Handle: RePEc:iza:izadps:dp4802
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Keywords: human capital; English language; India;

Other versions of this item:

Find related papers by JEL classification:
  • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
  • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
  • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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  1. 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.
  2. Angrist, Joshua & Chin, Aimee & Godoy, Ricardo, 2008. "Is Spanish-only schooling responsible for the Puerto Rican language gap?," Journal of Development Economics, Elsevier, vol. 85(1-2), pages 105-128, February.
  3. Kaivan Munshi & Mark R. Rosenzweig, 2005. "Why is Mobility in India so Low? Social Insurance, Inequality, and Growth," CID Working Papers 121, Center for International Development at Harvard University.
  4. Angrist, Joshua D & Lavy, Victor, 1997. "The Effect of a Change in Language of Instruction on the Returns to Schooling in Morocco," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 48-76, January.
  5. Emily Oster & M. Bryce Millett, 2010. "Do Call Centers Promote School Enrollment? Evidence from India," NBER Working Papers 15922, National Bureau of Economic Research, Inc.
  6. Robert T. Jensen, 2010. "Economic Opportunities and Gender Differences in Human Capital: Experimental Evidence for India," NBER Working Papers 16021, National Bureau of Economic Research, Inc.
  7. 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.
  8. Gauri Kartini Shastry, 2012. "Human Capital Response to Globalization: Education and Information Technology in India," Journal of Human Resources, University of Wisconsin Press, vol. 47(2), pages 287-330.
  9. Albert Saiz & Elena Zoido, 2005. "Listening to What the World Says: Bilingualism and Earnings in the United States," The Review of Economics and Statistics, MIT Press, vol. 87(3), pages 523-538, August.
  10. 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.
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