The effect of linguistic proximity on immigrants’ labor market performance

With the current increase of global mobility, immigration policy has jumped to the forefront of the political agenda. Immigration can play a central role in boosting economic growth and demographic sustainability of a destination country, but it is often feared as a potential burden to the welfare system and as a strain on social cohesion.

The key to this debate requires an understanding of what makes immigrants successful. Decades of research on immigrant assimilation have isolated a few basic traits that define immigration policies around the world. Linguistic fluency stands up as a major player in immigrants’ social and economic integration.

The analysis of its impact on immigrant outcomes should be of particular interest for countries that have based their immigration policies on attracting high skilled immigrants, and for those contemplating such policies in the near future (see OECD. “Who should be admitted as a labour migrant?”, Migration Policy Debates 4, 2014)

Linguistic proximity is associated with better wages

Combining information from the Canadian Census (1991-2006) with measures of linguistic proximity and the skills required in a broad range of occupations, a new IZA Discussion Paper by Alicia Adserà and Ana Ferrer assesses whether the wages and skills required for jobs that immigrants hold are influenced by the linguistic proximity between the languages of the source and host countries.

Of particular interest is whether linguistic proximity matters more for obtaining and/or moving to jobs that require specific social or communication job-skills, rather than for jobs requiring specific analytical or strength skills. These are the key results:

1. Linguistic proximity is generally associated with better wages. The wages of immigrants from countries whose most used language shares no linguistic connection (in the dictionary of languages) with the most used language in Canada, are 20% lower than those of similar natives. The penalty for lack of linguistic proximity to English is larger for the university-educated. Wages for this group are 25% lower than those of university educated native born, whereas the difference is only 18% among the non-university educated.
2. Linguistic proximity significantly affects the returns associated with skills required for the jobs immigrants hold. Wage penalties are mostly linked with lower returns to social skills rather than to other skills: returns are up to 28% lower for immigrants in a job using similar levels of social skills than a native born, but only 16% (12%) lower in a job requiring similar levels of strength (analytical) skills than a native born. These differences exist even for immigrants from English-speaking countries: 6% lower wages than natives in jobs requiring similar levels of social skills, but no difference in those requiring similar levels of strength or strength skills.
3. There is not strong evidence that linguistic proximity influences the rate at which migrants converge toward wage parity with native-born workers in the medium to long term, although it affects the initial level of wage differences. (Figure 1).
4. Similarly, linguistic proximity is associated with the types of skills required in the jobs immigrants hold, but not with the rate at which immigrants switch to higher-status jobs over time, which remain largely flat (Figure 2).

These findings generally agree with the predictions of human capital theory that linguistic proximity will be correlated with high wages and will be complementary to education. However, they show that linguistic proximity is unlikely to accelerate the rate at which assimilation (in wages or job status) happens.

Early language intervention facilitates economic integration

According to the human capital model, this could be due to lack of improvement in language skills over time – for instance, if ethnic enclaves limit economic opportunities and learning. Early intervention in language integration policies could be most beneficial for economic integration.

However, it is also possible that there are systematic barriers that limit integration, which can be (or not) related to language proficiency. This could be the case if, as noted in related research, immigrants arriving as adults may never reach the level of proficiency required to access certain types of high level jobs or there is discrimination.

Image Source: pixabay & IZA DP No. 9499