Language barriers pose a significant challenge in the United States and other countries. As immigrants become more comfortable and able with a language, their wage rises. A recent study explores how language proficiency affects wage growth at different skill levels. By studying Russian immigrants to Israel, the study found that:

• For each unit increase in Hebrew proficiency on a 4-step scale, there is a 5.7 percent increase in wages and a total increase of 23 percent in earnings associated with fluency in Hebrew.

• Improved Hebrew language skills account for between two-thirds and three-fourths of the difference between a native's wage increase and an immigrant's wage increase.

• In contrast, for construction workers and gas attendants, language acquisition has no discernible effect on wages.

This has important implications for American policy. As the technology industry lobbies for more hi-tech immigrants from India and Asia, the immigrants' language fluency will affect their future earnings growth. Similarly, as other immigrants fill the "boiler room" of America, the incentives to learn English are not as high.

Source: Eli Berman, Kevin Lang, and Erez Siniver, "Language-Skill Complementarity: Returns to Immigrant Language Acquisition," Working Paper w7737, June 2000, National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, Mass. 02138, (617) 868-3900.

For Abstract: http://www.nber.org/papers/w7737