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Returns to Local and Foreign Language Skills – Causal Evidence from Spain

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  • Isphording, Ingo

Abstract

This study examines the returns to foreign and local language skills of immigrants in the Spanish labor market. Different sources of endogeneity are addressed by deriving a set of novel instruments for language proficiency through a measure of linguistic dissimilarity. Using cross-sectional data from the 2007 National Immigrant Survey of Spain (NISS), returns to language skills are estimated separately for Spanish, English, German and French proficiency. Foreign language proficiency produces high returns, which appear to be mediated through the channel of occupational choice. The results are discussed against the background of a severe foreign language skills shortage in the Spanish economy. Immigrants may deal as a supplier of foreign language proficiency in the short run. In contrast to most studies, I find no compelling evidence of a wage premium for local language proficiency.

Suggested Citation

  • Isphording, Ingo, 2013. "Returns to Local and Foreign Language Skills – Causal Evidence from Spain," Ruhr Economic Papers 398, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
  • Handle: RePEc:zbw:rwirep:398
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    References listed on IDEAS

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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. David Reher & Miguel Requena, 2009. "The National Immigrant Survey of Spain. A new data source for migration studies in Europe," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 20(12), pages 253-278.
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    12. Ingo Eduard Isphording & Sebastian Otten, 2013. "The Costs of Babylon—Linguistic Distance in Applied Economics," Review of International Economics, Wiley Blackwell, vol. 21(2), pages 354-369, 05.
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    Citations

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    Cited by:

    1. Ramon Caminal & Antonio Di Paolo, 2015. "Your Language or Mine?," Working Papers 852, Barcelona Graduate School of Economics.
    2. Zorlu, Aslan & Hartog, Joop, 2018. "The Impact of Language on Socioeconomic Integration of Immigrants," IZA Discussion Papers 11485, Institute of Labor Economics (IZA).
    3. Bia, Michela & Flores-Lagunes, Alfonso & Mercatanti, Andrea, 2018. "Evaluation of Language Training Programs in Luxembourg using Principal Stratification," GLO Discussion Paper Series 289, Global Labor Organization (GLO).
    4. repec:bla:labour:v:31:y:2017:i:3:p:265-287 is not listed on IDEAS
    5. Wang, Haining & Smyth, Russell & Cheng, Zhiming, 2017. "The economic returns to proficiency in English in China," China Economic Review, Elsevier, vol. 43(C), pages 91-104.
    6. repec:bla:intmig:v:51:y:2017:i:3:p:632-666 is not listed on IDEAS
    7. Dale-Olsen, Harald & Finseraas, Henning, 2019. "Linguistic Diversity and Workplace Productivity," IZA Discussion Papers 12621, Institute of Labor Economics (IZA).
    8. repec:wiw:wiwreg:region_5_1_203 is not listed on IDEAS
    9. Wang, Haining & Cheng, Zhiming & Smyth, Russell, 2016. "Language and consumption," China Economic Review, Elsevier, vol. 40(C), pages 135-151.

    More about this item

    Keywords

    language skills; migration; human capital; linguistic distance; instrumental variable;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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