English Proficiency and Labour Supply of Immigrant in Australia

This article explores the impact of English proficiency on labour supply of recent immigrants in Australia. Previous research has shown that English ability is important for participation and employment, however little research has been done with respect to hours worked. This study uses the second cohort of the Longitudinal Survey of Immigrants to Australia (LSIA) data to estimate a random effects Tobit model—the correct approach when the dependent variable is bounded by zero. To obtain consistent estimates of censored regression models with random effects, we employ the Chamberlain style Tobit random effects estimator. The second cohort arrived in 1999-2000 and includes two waves of LSIA data, with the waves being interviewed six and 18 months after arrival. The results suggest that English ability is positively related to the hours worked by immigrants. Therefore, if immigrants are proficient in English, they are more likely to be successful in the destination labour market.