Language and Earnings among Immigrants in the United States

This study of the determinants of earnings among adult foreign-born men using the 1990 Census of Population focuses on the effects of the respondent's own English language skills, the effects of living in a linguistic enclave, and the stage of the business cycle at entry into the U.S. labor market. The analysis demonstrates the importance of English language fluency among the foreign born from non-English speaking countries. Those who are fluent earn 15 to 19 percent more than those who lack fluency. Earnings are lower in an area with a higher minority language concentration, especially among those with greater English language fluency. There is strong evidence for the endogeneity between language and earnings. Language skills are acquired in response to economic incentives. There is also strong evidence for the complementarity between language skills and other forms of human capital. The partial effects on earnings of schooling and on-the-job-training are greater for those who are more fluent in English. Weekly earnings are lower among those who enter the U.S. labor market in a period of high unemployment. This adverse effect, however, is temporary as it disappears over time.