No Entiendo: The Effects of Bilingualism on Hispanic Earnings

This paper examines the economic consequences of bilingualism. Specifically, we explore whether the ability to effectively communicate in English and Spanish is rewarded in labor markets. Using a sample of the Hispanic population drawn from U.S. census data for the year 2000 we find that controlling for education, gender, age, place of birth, sector and region of employment, earnings are higher as the ability to speak English increases. This finding is in line with traditional theories of assimilation in labor markets. We also find that bilingualism, namely the ability of speaking English and Spanish, is associated with higher wages reversing the negative effect found in earlier studies. The reversal could be explained by two trends associated with higher demand for bilingual individuals in labor market: changing demographics resulting from increasing immigration from the South, and from economic integration with Spanish speaking Latin America in the 1990s. The estimated effect is, however, substantively small. Our results also show that bilingualism is negatively correlated with wage-based income among different occupational categories and sectors, but particularly among managers and those employed in the public sector