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Language Fluency and Earnings : Estimation with Misclassified Language Indicators

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  • Dustmann, C.
  • van Soest, A.H.O.

    (Tilburg University, Center For Economic Research)

Abstract

We use panel data to analyze the determinants of speaking fluency and wages of immigrants. Our model takes account of two problems that may bias OLS estimates of the impact of speaking fluency on earnings. First, subjective variables on an ordinal discrete scale, such as self-reported language ability, can suffer from misclassification errors. The model decomposes misclassification errors into a time-persistent and a time-varying component. Second, the model accounts for correlated unobserved heterogeneity in language and earnings equation. The main finding is that these two generalizations of the standard model both lead to substantial changes in the estimated effect of speaking fluency on earnings. © 2001 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology
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Suggested Citation

  • Dustmann, C. & van Soest, A.H.O., 1998. "Language Fluency and Earnings : Estimation with Misclassified Language Indicators," Discussion Paper 1998-120, Tilburg University, Center for Economic Research.
    • Handle: RePEc:tiu:tiucen:5f5a4231-5663-4a13-92a7-51aaf5dd2805
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    References listed on IDEAS

    as
    1. 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.
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    More about this item

    Keywords

    panel data; wages; foreign workers;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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