Abstract
The globalisation of labour markets makes language skills one of the key competences required by employers nowadays. The purpose of this paper is to estimate the wage premium from the foreign language skills earned by Poles. Poles seem to be a good case study, because the Polish language is not used for international communication and as many as 58% of Poles command at least one foreign language. I use data from three waves (2012–2014) of the Human Capital Balance survey with a pooled sample of about 35,000 individuals. I estimate a wage equation with the Heckman correction for selection to employment and I check for robustness with propensity score matching. I find that the advanced command of a foreign language yields a wage premium of 11% on average. Interestingly, I find a much higher wage premium from proficiency in Spanish (32%), French (22%) or Italian (15%) than from proficiency in English (11%) or German (12%).
Highlights
Increasing globalisation, growing international trade, foreign direct investment and international labour migration are all causing the demand for language competences to grow, and according to forecasts, this trend will continue in the future (Antoni‐ etti and Loi 2014; Isphording 2015)
The wage premium estimated in this way will reflect returns to foreign language skills (FLS), and returns to other skills and abilities that were useful for studying foreign lan‐ guages and are useful at work
After the other respondents’ skills (Si) are included in the model, the wage premium from advanced FLS falls from 15 to 11% and the premium from intermediate FLS—from 7 to 5%. This decrease may result from a reduction of the endogeneity bias owing to the inclusion of the set of other skills. The reason for this is that respondents’ abili‐ ties and motivation likely have a positive impact on both linguistic and non-linguis‐ tic skills; we can expect a decrease in the estimate of the wage premium to FLS after the set of non-linguistic skills is included in the model
Summary
Increasing globalisation, growing international trade, foreign direct investment and international labour migration are all causing the demand for language competences to grow, and according to forecasts, this trend will continue in the future (Antoni‐ etti and Loi 2014; Isphording 2015). Empirica (2019) 46:691–711 to Poland has been observed since 2004, and approximately 900,000 Poles have migrated to the United Kingdom and Ireland with the opening of EU labour markets in 2006. Under such circumstances, the command of foreign languages is becoming one of the key competences on the global labour market. The command of foreign languages is becoming one of the key competences on the global labour market It is not surpris‐ ing that substantial public and private funds are allocated to language education. Learning two foreign languages is obligatory in schools in Poland, which is similar to most European countries. As language education can be expensive, it seems interest‐ ing from an economic point of view whether this type of education brings any ben‐ efits—and in particular, wage benefits—to individuals in the labour market
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