The effects of language ability on labor market outcomes

Official URL: https://risc01.sabanciuniv.edu/record=b2748995_(Table of contents)

The main purpose of this paper is to analyze the causal impact of language ability on labor market outcomes in developed European countries using objective measure of language ability. To do so, observations from the first round of PIAAC survey conducted in 2012 are used. Using the critical age hypothesis to create an instrumental variable and concentrating on childhood immigrants, this thesis shows that language ability has a causal impact on earnings and occupational prestige, but has no impact on probabilities of labor force participation and employment. Furthermore, the study demonstrates that language ability has a causal effect on several labor market skills. These skills, on the other hand, have not been proved to be mediators between language ability and earnings. Finally, the study demonstrates that improving language skills reduces the experience gap among childhood immigrants.