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The Wage Premium from Foreign Language Skills

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  • Liwiński, Jacek

Abstract

The globalization of labour markets makes language skills one of the key competences required by employers nowadays. Our purpose is to estimate the wage premium from foreign language skills (FLS) earned by the Poles. We also want to find out whether this premium is affected by the fact of working in Poland or abroad. The Poles seem to be a good case study, because the Polish language is not used for international communication, while as much as 58% of Poles command at least one foreign language and 5% of Poles earn their income abroad. We use data from three waves (2012-2014) of the Human Capital Balance survey with a pooled sample of about 35,000 individuals. We estimate wage equation with the Heckman correction for selection to employment and we check for robustness with propensity score matching. We find that the advanced command of a foreign language bring a 6% wage premium to individuals working in Poland and 22% to those working abroad. Interestingly, those working in Poland earn a much higher wage premium from proficiency in Spanish (29%), Italian (20%) or French (19%) than from proficiency in English (8%). But the English language is the only foreign language that brings a wage premium to Poles working abroad.

Suggested Citation

  • Liwiński, Jacek, 2018. "The Wage Premium from Foreign Language Skills," GLO Discussion Paper Series 251, Global Labor Organization (GLO).
  • Handle: RePEc:zbw:glodps:251
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    More about this item

    Keywords

    foreign language skills; wage premium; wage equation;

    JEL classification:

    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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