Language Fluency and Earnings: Estimation with Misclassified Language Indicators

Christian Dustmann · Arthur van Soest

287 citations0/0 files storedThe Review of Economics and Statistics

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Migration and Labor Dynamics Labor market dynamics and wage inequality Labour Market and Migration

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.

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References

1987Self-Selection and the Earnings of Immigrants 1984A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data 1978Education and Self-Selection 1995The Endogeneity between Language and Earnings: International Analyses 1979Education and Self-Selection 2003Language Proficiency and Labour Market Performance of Immigrants in the UK 1982A Computationally Efficient Quadrature Procedure for the One-Factor Multinomial Probit Model 1991Speaking, Reading, and Earnings among Low-Skilled Immigrants

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2005Enclaves, language, and the location choice of migrants 2015International Migration and the Economics of Language 2000Language-Skill Complementarity: Returns to Immigrant Language Acquisition 2011English language proficiency and earnings in a developing country: The case of South Africa 2004The English language fluency and occupational success of ethnic minority immigrant men living in English metropolitan areas

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