Chapter 11 Culture, Investment in Language and Earnings

Cross-sectional studies have shown that immigrants' earnings tend to rise faster than those of comparable natives. One reason for this is the immigrant's acquisition of proficiency in the host country's native language. Immigrants can improve their knowledge of the host country language either by interacting with native speakers or by taking a formal language course. Focusing on Jewish immigrants in Israel from the Former Soviet Union (FSU), the present chapter examines an immigrant's decision to invest in learning Hebrew by participating in a formal government-sponsored course. The chapter estimates immigrants' lifetime earnings in order to identify those immigrants with the highest potential benefit from taking a Hebrew course and to determine whether they are more likely to attend one. The chapter finds that immigrants respond to pecuniary incentives to acquire the language of the host country and that this is particularly true for immigrants with 13+ years of schooling.