Abstract
As a tool of communication and a carrier of information, language learning needs to pay the price and cost, language ability is also a form of human capital, which has an impact on income and employment. In order to found the economics effects of language ability, we studied relationship between language ability and income using China Family Panel Studies (CFPS) data from 2010 to 2016. We found that improvement of both Mandarin proficiency and English proficiency can significantly promote the total income and wage income. Considering the missing variables in the model and the endogeneity problem of reverse causality, instrumental variables were used to deal with the endogeneity problem, and the income effect of language ability still existed. From the perspective of the influence mechanism, social capital is an important channel through which language ability affects the total income of employees.
Highlights
In addition to technology and institutions, language is the third force driving economic growth (Aghion & Howitt, 2009)
The results showed that the regression coefficient of Mandarin proficiency on the logarithm of total income was 0.0403, which was statistically significant, indicating that the improvement of Mandarin proficiency would have a significant promoting effect on individual total income
The results show that the improvement of both Mandarin proficiency and English proficiency can significantly promote the total income and wage income, but the English proficiency is stronger
Summary
In addition to technology and institutions, language is the third force driving economic growth (Aghion & Howitt, 2009). As early as 1956, the State Council issued the Directive on the Promotion of Mandarin to promote its use In this way, people can communicate even if they do not understand a dialect or a minority language that is different from their hometown. The social network can be expanded, which is increased the opportunities for employees to contact with more groups and classes so as to accumulate more experience, knowledge and skills (Wang et al, 2016) Another advantage is that speaking Mandarin helps reduce discrimination against them by local consumers and employers (Gao & Smyth, 2011). Gao and Smyth (2011) found that Mandarin has a positive impact on the wages of Chinese migrant workers, but they did not compare the income effect of Mandarin with that of English. The effect of language ability on employment is investigated
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