Language and Earnings: How Proficiency in Official Languages Affects Immigrants' Earnings in Canada

Abstract

This paper studies how proficiency in host countries’ official languages affects immigrants’ earnings in destination countries. An earnings gap is found between Canadian-born and immigrant workers in Canadian labor market. Taking advantage of rich information about language use from the Ethnic Diversity Survey, language spoken at work, home, EDS interview, with friends, spouses and children are included in an attempt to reduce the earnings gap. Among all languages examined, individuals who speak English have the highest earnings in each context. Results also show that language spoken at home has the greatest effects on immigrants’ earnings in Canada as the gap is eliminated when home languages are controlled in the model. Immigrants who speak English at home benefit from extra practice with families, which helps them become more fluent faster. Potential policy implication implies both timely and monetary investment in language training is useful for helping immigrants settle down in Canada.