Language Proficiency and Labour Market Performance of Immigrants in the UK

This paper uses two recent UK surveys to investigate labour market performance, the determi-nants of language proficiency, and the effect of language on earnings and employment prob-abilities of non-white immigrants. Our results show that language acquisition, employment prob-abilities, as well as earnings differ widely across non-white immigrants, according to their ethnic origin. Language has a strong and positive effects on employment probabilities. Furthermore, lack of English fluency leads to substantial earnings losses of immigrants. While earnings of white and ethnic minority natives develop in a similar manner, there is a large earnings gap be-tween these two groups, and ethnic minority immigrants. English fluency contributes considera-bly to reducing these differences. Addressing the problems of measurement error and unob-served heterogeneity in language variables, our results indicate that measurement error in the language variable leads to underestimation of the importance of language for employment prob-abilities and earnings in straightforward regressions. In comparison with results found for other countries, language proficiency seems to be more important for labour market outcomes of UK immigrants.