LANGUAGE PROFICIENCY AND LABOUR MARKET PERFORMANCE – THE EXPERIENCE OF IMMIGRANTS TO THE UK

Fluency in English has a significant impact on the pay and job prospects of UK immigrants from ethnic minorities. According to new research by Christian Dustmann and Francesca Fabbri, published in the July 2003 issue of the Economic Journal, English language proficiency increases the likelihood of immigrants being in employment by 22 percentage points and is associated with 18-20% higher earnings.

The study analyses the determinants of fluency and literacy in the host country language for immigrants from ethnic minority groups in the UK, as well as the effect of language proficiency on employment and wages. Language proficiency is probably the single most important factor in the process of immigrants' economic assimilation and social integration.

The study finds that:

Acquisition of the English language is strongly influenced by education, age and years of residence in the host country.
Language proficiency is negatively associated with ethnic concentration at ward level of immigrants of the same ethnic origin.

The are two problems in identifying the causal relationship between language proficiency on the one hand and employment probabilities and the level of earnings on the other: first, those who find it easier to learn the language may at the same time have higher employment probabilities or wages; and second, there is the possibility of mismeasurement of the language variable.

Dustmann and Fabbri’s results suggest that measurement error leads to a downward bias in the estimates of language on employment probabilities and earnings, and that the true effects are larger than are suggested by simple regression analysis.
The researchers’ best estimates suggest that fluency in English increases employment probabilities by about 22 percentage points. Furthermore, ordinary regression estimates show that proficiency in English is associated with 18-20% higher earnings. Estimates that take account of both measurement error and endogenous selection are slightly larger.
According to the Labour Force Survey of 2000, immigrants (defined as individuals who were born outside the UK) account for around 9% of the working age population of the UK. The results of this study refer only to those immigrants who belong to ethnic minority communities – according to the Labour Force Survey, 49% of the total immigrant population in the UK.

The analysis is based on data from two UK surveys on ethnic minorities: the Fourth National Survey on Ethnic Minorities, which was collected in 1993 and 1994, and the Family and Working Lives Survey, which was collected in 1994 and 1995.

ENDS

Notes for Editors: ‘Language Proficiency and Labour Market Performance of Immigrants in the UK’ by Christian Dustmann and Francesca Fabbri is published in the July 2003 issue of the Economic Journal.

The authors are in the Department of Economics at University College London, Gower Street, London WC1E 6BT.

For Further Information: contact Christian Dustmann on 020-7679-5832 (fax: 020-7916-2775; email: c.dustmann@ucl.ac.uk); or RES Media Consultant Romesh Vaitilingam on 0117-983-9770 or 07768-661095 (email: romesh@compuserve.com).