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Literacy and the Migrant–Native Wage Gap

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  • Oliver Himmler
  • Robert Jäckle
Abstract
Being able to read and write is one of the most important skills in modern economies. Literacy frequently is a prerequisite for employment and its relevance for productivity and wages is magnified by the fact that it is only through literacy that many other skills become usable. More so than for natives, this argument applies to migrants: even those with high levels of human capital acquired in the country of origin often have it rendered worthless by the absence of literacy in the host‐country language. Using novel data from a large‐scale German adult literacy test (“leo.—Level‐One Studie”, or “LEO”), we investigate the determinants of literacy and show that migrants have systematically lower language skills than natives. We find that any observed raw employment and wage gaps between natives and migrants can be fully explained by these differences.

Suggested Citation

  • Oliver Himmler & Robert Jäckle, 2018. "Literacy and the Migrant–Native Wage Gap," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(3), pages 592-625, September.
    • Handle: RePEc:bla:revinw:v:64:y:2018:i:3:p:592-625
    DOI: 10.1111/roiw.12299
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    2. Valentine Fays & Benoît Mahy & François Rycx, 2023. "Wage differences according to workers' origin: The role of working more upstream in GVCs," LABOUR, CEIS, vol. 37(2), pages 319-342, June.
    3. Valentine Fays & Benoît Mahy & François Rycx & Mélanie Volral, 2021. "Wage discrimination based on the country of birth: do tenure and product market competition matter?," Applied Economics, Taylor & Francis Journals, vol. 53(13), pages 1551-1571, March.
    4. Valentine Jacobs & Kevin Pineda-Hernández & François Rycx & Mélanie Volral, 2023. "Does over-education raise productivity and wages equally? The moderating role of workers’ origin and immigrants’ background," Education Economics, Taylor & Francis Journals, vol. 31(6), pages 698-724, November.
    5. Andrej Cupák & Pavel Ciaian & d'Artis Kancs, 2021. "Comparing the immigrant-native pay gap: A novel evidence from home and host countries," EERI Research Paper Series EERI RP 2021/05, Economics and Econometrics Research Institute (EERI), Brussels.
    6. Samuel Vézina & Alain Bélanger, 2020. "Literacy Skills as an Explanation for Labor Market Imbalances by Occupational Type in Canada: Microsimulation Projections for 2014–2024," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 39(6), pages 1019-1049, December.
    7. L. Pieroni & G. d’Agostino & D. Lanari & M. Scarlato, 2024. "Immigrant Labour Market Outcomes: New Insights from a Lack of Language Proficiency in Italy," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 10(1), pages 293-327, March.
    8. Ayaita, Adam, 2023. "Is There an Ethnic Pay Gap in Germany? Evidence from a Representative Sample of the Adult Population," EconStor Preprints 267865, ZBW - Leibniz Information Centre for Economics.
    9. Claudio Fassio & Sona Kalantaryan & Alessandra Venturini, 2020. "Foreign Human Capital and Total Factor Productivity: A Sectoral Approach," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 66(3), pages 613-646, September.

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    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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