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“Language skills and the transferability of human capital – An empirical investigation based on PSID

Time:2014-07-03 Clicks:


We report the degree to which English-language proficiency (EP) determines earnings among immigrants to the United States using a more nuanced measure of EP than employed in previous studies. We obtain direct and indirect (through human-capital transfer) estimates of the impact of EP on earnings using nonlinear least squares (NLS) to estimate an earnings function with separate arguments for schooling and experience obtained before and after immigration to the United States. We find that immigrants with the highest level of EP earn on average over 90% more than those with an intermediate proficiency level in addition to higher returns to education obtained before immigration. Immigrants who graduated from four-year institutions of higher education before immigration and who have at least intermediate levels of EP receive a higher return to their years of college education than do those who completed their higher education in the United States, but the opposite is true for high-school graduates. Our results challenge the hypothesis that human capital obtained before immigration is imperfectly transferrable to the destination country.