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Is there a wage premium for bilingual education? Evidence from a language of instruction reform
We use a reform of the language of instruction in Catalan schools to estimate the earnings returns to bilingual education. While existing studies focus on the effects of switching the mean of instruction from colonial to local languages, this is the first paper considering the wage impacts of introducing bilingualism in a bilingual labour market of a developed economy. Variation in exposure to the reform depends on years of schooling and year of birth. This represents the source of identification in a diff-in-diff framework. We find that that returns to bilingual schooling are positive and decreasing with years of exposure. The results are robust to selection in employment and lifecycle/cohort differences in earnings. Several falsification tests, aimed at capturing potential spurious effects due to education-cohort specific trends in earnings, support our identification strategy. We also show that returns to bilingual education are not driven by selection into schooling and are mainly stemming from exposure at compulsory education. Additional reduced form and 2SLS estimates suggest that increased bilingual skills are the main mechanisms through which compulsory reform’s exposure affects labour market outcomes, especially among Spanish-speakers. This is consistent with both human capital effects and better matches in an increasingly bilingual labour market.
Lorenzo Cappellari is full professor of Political Economy at the Catholic University of Milan, where he also teaches Labour Economics and Econometrics. He is research fellow at IZA and CESIFO, and he carried on research activity within the OECD, the Russel Sage Foundation, the Nuffield Foundation and the British Academy. Moreover, Lorenzo Cappellari is visiting professor at the Danish National Center for Social Research (Copenhagen) and he is Associate Editor of the Journal of the Royal Statistical Society – Series A. His research interests refer to Labour Economics, Inequality, Human Capital and Applied Microeconometrics.
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