VOLUME XXII
SPRING 2015

THE IMPACT OF LANGUAGE PROFICIENCY ON IMMIGRANTS’ EARNINGS
 
SANTIAGO BUDRÍA
CEEAplA and IZA
PABLO SWEDBERG
Department of Business, St. Louis University
 
This article uses micro-data from the Spanish National Immigrant Survey to analyze the impact of Spanish language proficiency on immigrants’ earnings. The results, based on Instrumental Variables (IV), point to a substantial return to Spanish proficiency, of approximately 20%. This figure varies largely between high- and low-educated immigrants. The higheducated earn a premium of almost 50%, while the premium for the loweducated fails to be statistically significant under some specifications. This conspicuous complementarity between education and language skills poses a challenge for traditional language training policies that need to address the immigrants’ heterogeneous educational background.
 
Key words: immigration, Spanish language proficiency, earnings, instrumental variables.
JEL Classification: F22, J24, J61.

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