Using the first wave of the UK Household Longitudinal Survey, we investigate how deficiency at English as measured by English as Additional Language (EAL), contribute to the first generation immigrant-native wage gap for female employees in the UK, after controlling for age, region of residence, educational attainment and ethnicity. To deal with the endogeneity of EAL and a substantial problem of self-selection into employment we suggest a 3-step estimation (TSE) procedure and use the interaction of language of country of birth and a late age-at-arrival indicator as instrument for EAL, exploiting variations in the female-to-male ratios of labor force participation and educational attainment by country of birth to instrument employment status. The properties of the TSE estimator are investigated in a Monte Carlo simulation study and we show evidence that suggests our procedure delivers a consistent and asymptotically normal estimator. We find a large and statistically significant causal effect of EAL on the immigrant-native wage gap.
Presented by:
Alfonso Miranda (CIDE)
Date & time:
May 18, 2015 2:00 pm - May 18, 2015 3:30 pm
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