This study addresses two issues. First it estimates how much of the male and female ethnic earnings gap is the result of an advantage in the English language and whether there is an earnings penalty to non–whites, over and above this. Lack of fluency is shown to have a highly significant impact on the earnings of ethnic minorities in Britain, although the language penalty is much greater for women than it is for men. Moreover, only foreign born non–white males that have arrived in Britain between 1970 and 1994, exhibit lower earnings once language fluency is taken into consideration, whilst British born females exhibit higher earnings. So the evidence here suggests that non–white earnings are assimilating towards those of whites and that lower female non–white earnings are a direct result of a lack of fluency rather than ethnicity. Secondly, the study will try to measure any endogenous bias associated with the non–fluency earnings penalty. Controlling for the endogeneity between language fluency and earnings is shown to be problematic. Estimates suggest that single equation earnings functions slightly underestimate the true language fluency penalty for males, and slightly overestimate the fluency penalty for females. Finally, education and fluency are not surprisingly shown to be complementary.
Scottish Journal of Political Economy – Wiley
Published: Sep 1, 2002
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