The earnings of immigrants in the United States : The effect of english-speaking ability

Abstract

I Introduction In 1993 the United States became the home of almost one million immigrants.(1) It is estimated that over 90 percent of them spoke languages other than English as their first language.(2) For immigrants whose first language is not English, proficiency in English may exert much influence on how successfully they fare in leading new lives in the United States. In particular, English proficiency may be an important determinant of their earnings in the U.S. labor market. There are many reasons why an immigrant-worker's language handicap may put him at an earnings disadvantage. English deficiency is likely to make it difficult to transfer skills obtained abroad to the U.S. labor market. Non-English speakers in the U.S. labor market may have limited employment and training opportunities. They are also likely to have limited mobility, both occupationally and geographically. Lack of English proficiency may hinder a prospective employer from obtaining information about a worker, and the worker himself may have trouble obtaining information about available jobs. There is also evidence that immigrants lacking in English proficiency face discrimination in the U.S. labor market (Reimers, 1983). Despite these plausible arguments, empirical studies provide mixed results about the significance of English fluency on the earnings of immigrants. Many studies - including McManus, Gould, and Welch (1983), Grenier (1984), Stewart and Hyclak (1984), McManus (1985), Kossoudji (1988), Tainer (1988), Rivera-Batiz (1990), Chiswick (1991), and Meisenheimer (1992) - find English proficiency to be an important factor in the determination of the earnings of immigrants. On the other hand, many other studies - including Gwartney and Long (1978), Carliner (1980), Reimers (1983), and Borjas (1984) - conclude that English language skill is not a significant factor in immigrants' labor market success in the United States. In this article, I evaluate the importance of English-speaking ability in determining the earnings of immigrants in the United States from a point of view not taken by the studies listed above. Unlike these studies, where the effect of English proficiency is modeled to be direct, I examine the effect of English proficiency on the parameters of other variables in the earnings equation.(3) In particular, I examine the effect of English proficiency on immigrants' return to education and on experience obtained before and after migration. Using data from the 1976 Survey of Income and Education, I find evidence consistent with the hypothesis that English language is an important determinant of the earnings of immigrants. The results indicate that for immigrants whose first language is English or who speak English very well, fluency in English is valuable because it facilitates the transfer to the U.S. labor market of schooling and experience obtained abroad. For immigrants whose first language is not English, especially for those who do not speak English very well, the importance of English proficiency is best viewed as a type of general productive human capital, in which they should invest early in their years in the United States. I also use data from the 1990 U.S. Census to assess the relevancy of the results obtained from the 1976 survey. Although the 1990 Census does not have a key variable - years of education obtained outside the United States - the results based on imputed years of foreign education are very similar to those based on the 1976 survey. II Data and Approach The primary data used in this article are from the 1976 Survey of Income and Education (SIE). This survey, conducted by the U.S. Bureau of the Census from May through July of 1976 for the Office of Education, contains individual-specific information on income, employment status, education, ethnicity and other related demographic characteristics, and, for people not born in the United States, information on the place of birth, schooling received abroad, year of arrival in the United States, and various linguistic characteristics. …