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Working Paper No. 2007 | 03

No Entiendo: The Effects of Bilingualism on Hispanic Earnings

by Jeronimo Cortina (Political Science), Pablo Pinto (Political Science), and Rodolfo De la Garza (Political Science)

This paper examines the economic consequences of Spanish/English bilingualism in the United States. Specifically, the authors explore whether the ability to effectively communicate in English and Spanish is rewarded in labor markets. Using a sample of the Hispanic population in the United States drawn from census data for the year 2000, they find that bilingualism is indeed associated with higher income. The effect is, however, substantively small: on average the income level of bilingual Hispanics is 2.7 percentage points higher than the income of those that Hispanics that only speak English after accounting for educational attainment, gender, age, origin, sector and region of employment and occupation. This could be construed as good news for bilingual Hispanics, particularly when contrasted with results from previous studies that had found a negative association between bilingualism and income in the early 1990s. The different results in this study could be a reflection of changes in the composition of the U.S. population, and could even respond to the ongoing economic integration with Spanish speaking Latin America, which would allegedly make the knowledge of Spanish more valuable. Yet, this study also find evidence that bilingualism is not rewarded in all segments of the labor market and occupations. Across occupational categories, the authors find that bilingualism is negatively correlated with wage-based income among managers, business and financial specialists; the relationship is positive for education, health support, protective service, and food preparation. A similar pattern emerges in the analyses within sectors. While the correlation between bilingualism and income is positive among non-supervisory laborers in manufacturing, the association turns negative among those in managerial positions. Moreover, for those employed in the public sector where one would assume that the ability to speak both Spanish and English would be particularly valued, the authors find a negative correlation between bilingualism and income for all occupation categories. This paper discusses two plausible explanations for these results. The first explanation points to supply side conditions: it is possible that our operationalization of concepts in the key explanatory and control variables are not capturing important individual characteristics that could lead to differential productivity among the groups of bilinguals and those who speak English only. Lower wages may reflect the extent to which Spanish-speaking Latinos including those who are fluent in English, receive educational services of lower quality than Hispanics that speak English only, and even non-Hispanic whites despite similar education attainment levels. Alternatively, the difference in earnings could be the consequence of discrimination in labor markets. Unfortunately, it is not possible to differentiate between these explanations with the data at hand. Yet the results that, even when fully bilingual, the earnings of a group of Hispanics are systematically lower in different segments of the labor market suggest that not all Latinos will be capable of experiencing equity in the labor market and follow a conventional path to assimilation.