Language-skill complementarity: returns to immigrant language acquisition

Abstract

We examine how language acquisition affects immigrant earnings growth for Soviet immigrants to Israel. Using retrospective information on linguistic proficiency to control for heterogeneous ability, we find that language complements high-skill occupations. Improved Hebrew accounts for 2/3 to 3/4 of the differential in earnings growth between immigrant and native programmers and technicians. In contrast, immigrant construction workers and gas station attendants have no wage convergence with natives, with language acquisition having no discernible effect. These findings invite reinterpretation of previous studies on returns to language, as positive estimated returns to language acquisition in cross-sections may suffer from (positive) ability bias in low-skilled occupations.