Language Usage, Participation, Employment and Earnings

Language ability may not only a ect the earnings of the individual, but the participation to participate in the labor market or becoming employed as well. It may also a ect selection of people into economic sectors and occupation. In this paper the e ects of language ability on earnings are analyzed for for- eigners in Germany with joint consideration of up to four types of self-selection. The results show that language pro ciency signi cantly increases participation and employment probability and a ects earnings directly. However, when self-selection into economic sectors and occupation is regarded, the direct e ects of language ability on earnings vanish