Immigrant earnings: Language skills, linguistic concentrations and the business cycle

Journal of Population Economics, no. 1 (2002): 31-57

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Abstract

.   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 concentration area, and the effects of the stage of the business cycle at entry into the U.S. labor market. The anal...More

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Introduction
  • Chiswick and Miller (1992), for example, report that among adult foreign-born men in the U.S 1980 Census of Population, English language fluency is associated with around 17% higher earnings.
  • To measure the effect of the business cycle at entry on immigrant earnings, the analysis includes the adult male unemployment rate in the United States in the year of arrival or of entry into the U.S labor market, whichever is later.
Highlights
  • One set of issues relates to the individual's own language skills
  • To what extent are the earnings of immigrants in the United States influ? enced by the respondent's proficiency in English?1 Has there been a change over time in the effect of language proficiency on earnings? Are different forms of human capital complementary to language capital? That is, is language capital more productive in the labor market among those with more schooling and other forms of human capital? does it appear that investments in language capital are greater among those who expect to receive a greater economic return from English language proficiency? That is, is language proficiency endogenous to the labor market?
  • Individuals who speak English "not well" earn about the same as those who do not speak English at all, and there may be little difference in the English proficiency of these two groups. These results show that the labor market is quite discerning when it comes to language skills
  • This is computed from an equation with the same structure as Table 1, Column (iii) estimated separately for each birthplace. It is only among immigrants from South Asia, Sub-Saharan Africa and from non Spanish speaking parts of Central and South America that fluency in English is not associated with significantly higher earnings in the U.S labor market
  • A 10% increase in weeks worked in the year is associated with a 10% increase in annual earnings among those who are fluent, but only a 9% increase for the non-fluent group
  • The analysis demonstrates the importance for earnings of English language fluency
Results
  • The addition of the minority language concentration variable reduces the earnings disadvantage of the three Spanish-speaking birthplace groups: Mexico, Cuba, and the Spanish speaking regions of Central and South Amer?
  • It is apparent that residence in a region with a concentration of individuals speaking the same foreign language as the immigrant has a more negative impact on earnings among those fluent in English.
  • It is only among immigrants from South Asia, Sub-Saharan Africa and from non Spanish speaking parts of Central and South America that fluency in English is not associated with significantly higher earnings in the U.S labor market.
  • This may be reflecting an "ethnic goods" effect, that is, that immigrants sort themselves across the country to equalize real incomes and that "ethnic goods", including community ties and networking, have a lower cost the greater the concentration of people speaking the same origin language.
  • The finding of a temporary adverse effect on earnings from entering the U.S labor market in a period of high unemployment will add fuel to the debate on whether business cycle considerations should be explicitly included in the allocation of immigration visas.
  • Sample size 212,384 157,725 54,660 (a) The data are for men who worked and had earnings in 1989, were 25 to 64 years in 1990 and were born in non-English speaking countries.
  • A number of non-English speaking birthplace regions are considered in the analyses: Western Europe; Southern Europe; Eastern Europe; former Soviet Union; China; Indochina; Philippines; South Asia; Other (South-East) Asia; Korea; Japan; Middle East and North Africa; SubSaharan Africa; Mexico; Cuba; Central and South America (Spanish influence); Central and South America.
Conclusion
  • Chiswick and Miller (1998) find that, other variables the same, English language fluency among immigrants in the United States is lower the higher is the emigration or return migra?
  • 11 Using the equations with the selectivity corrections (Table 2, columns ii and iv), the partial effect of pre-immigration experience at 10 years is 1.7% for those who are fluent in English and 1.1% for those who are not fluent.
Summary
  • Chiswick and Miller (1992), for example, report that among adult foreign-born men in the U.S 1980 Census of Population, English language fluency is associated with around 17% higher earnings.
  • To measure the effect of the business cycle at entry on immigrant earnings, the analysis includes the adult male unemployment rate in the United States in the year of arrival or of entry into the U.S labor market, whichever is later.
  • The addition of the minority language concentration variable reduces the earnings disadvantage of the three Spanish-speaking birthplace groups: Mexico, Cuba, and the Spanish speaking regions of Central and South Amer?
  • It is apparent that residence in a region with a concentration of individuals speaking the same foreign language as the immigrant has a more negative impact on earnings among those fluent in English.
  • It is only among immigrants from South Asia, Sub-Saharan Africa and from non Spanish speaking parts of Central and South America that fluency in English is not associated with significantly higher earnings in the U.S labor market.
  • This may be reflecting an "ethnic goods" effect, that is, that immigrants sort themselves across the country to equalize real incomes and that "ethnic goods", including community ties and networking, have a lower cost the greater the concentration of people speaking the same origin language.
  • The finding of a temporary adverse effect on earnings from entering the U.S labor market in a period of high unemployment will add fuel to the debate on whether business cycle considerations should be explicitly included in the allocation of immigration visas.
  • Sample size 212,384 157,725 54,660 (a) The data are for men who worked and had earnings in 1989, were 25 to 64 years in 1990 and were born in non-English speaking countries.
  • A number of non-English speaking birthplace regions are considered in the analyses: Western Europe; Southern Europe; Eastern Europe; former Soviet Union; China; Indochina; Philippines; South Asia; Other (South-East) Asia; Korea; Japan; Middle East and North Africa; SubSaharan Africa; Mexico; Cuba; Central and South America (Spanish influence); Central and South America.
  • Chiswick and Miller (1998) find that, other variables the same, English language fluency among immigrants in the United States is lower the higher is the emigration or return migra?
  • 11 Using the equations with the selectivity corrections (Table 2, columns ii and iv), the partial effect of pre-immigration experience at 10 years is 1.7% for those who are fluent in English and 1.1% for those who are not fluent.
Tables
  • Table1: Regression estimates of earnings equations, adult foreign born men, 1990
  • Table2: Regression estimates of earnings equations, by English fluency, adult foreign born men,
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Funding
  • Chiswick and Miller (1992), for example, report that among adult foreign-born men in the U.S 1980 Census of Population, English language fluency is associated with around 17% higher earnings
  • The earnings advantage associated with fluency in the dominant language in the 1981 Cana? dian Census is about 12%, while those fluent in English in the Australian 1986 Census have about 8% higher earnings (Chiswick and Miller 1995).2
  • Fluency in the dominant language (Hebrew) in Israel (1972 and 1983 Censuses) is asso? ciated with about a 12% increase in earnings (Chiswick 1998 and Chiswick and Repetto 2001)
  • Rience, the earnings growth per year of experience is 1.6% (Table 1, Column i)
  • The estimates also show that married (spouse present) men earn around 20% more than their non-married counterparts.13
  • English (23%) than for the group lacking in English language fluency (15% higher earnings)
  • That is, a 10% increase in weeks worked in the year is associated with a 10% increase in annual earnings among those who are fluent, but only a 9% increase (i.e., weekly earning decline with weeks worked) for the non-fluent group
  • Com? pared to the benchmark group, immigrants from Western Europe, other immigrants essentially fall into four categories (see Table 1): immigrants from Japan who have earnings about 35% greater than the benchmark; immigrants from South Asia whose earnings are not significantly different from the earn? ings of immigrants from Western Europe; immigrants from countries with earnings 5 to 15% below the earnings of the Western Europeans (Sub-Saharan Africa, Southern Europe, Eastern Europe, the non-Spanish regions of Central and South America, Middle East, USSR); those from countries with earnings more than 15% below that of the benchmark group (Other Asia, Korea, Cuba, Philippines, the Spanish-speaking regions of Central and South Amer? ica, China, Indochina, Mexico)
  • The earnings disadvantage, ceteris paribus, is over 30%) for immigrants from Mexico
  • Fluency in English is associated with 14% higher earnings, ceteris paribus
  • This increment in earnings is slightly lower than that recorded in study of the 1980 Census (17% higher earnings), but the difference is at the margin of statistical significance (t ? 1.75)
  • In the linear specification, in the initial year (YRS = 0) the effect is nearly 1.8% lower weekly earnings for each one percentage point increase in the unemployment rate
  • If the unemployment rate among adult men in the year of labor market entry is 8% (a deep recession), then weekly earnings are initially reduced by 9% compared to a situation where there was a 3% unemployment rate among adult men (full employment).15
  • The second variable identifies indi? viduals who speak a language other than English at home and who self-report that they speak English "well". This group has earnings 9% lower than monolingual English speakers
  • The final two variables are for individuals who speak a language other than English at home and are not fluent in English. Immigrants in this situation have earnings almost 20% lower than the bench? mark group of monolingual English speakers
  • The second column treats immigrants from Western Europe as the reference group and reports the differences between the mean logarithm of earnings for each birthplace region and the reference group. These figures range from a high of 0.132 for Japan (14% higher earnings) to a low of -0.922 for Mexico (60% lower earnings)
  • In only four birthplace groups is there evidence of the labor market rewarding this skill, namely the Philip? pines (5% higher earnings), Mexico (10% higher earnings), the Spanish speaking regions of Central and South America (also 10% higher earnings) and the non-Spanish speaking regions of Central and South America (13% higher earnings)
  • Ceteris paribus, the foreign born from non-English speaking countries who are fluent in English earn about 14% more than those lacking this flu? ency
  • 2 This is greater than the 5.3% higher earnings for the fluent in the 1981 Australian Census (Chiswick and Miller 1995)
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