The Analysis of the Relationship between Immigran's Dominant Language Fluency and Earnings

Abstract

This project examines and analyzes how a Canadian immigrant’s dominant language fluency affects their earnings. The statistical methods of analysis used were Ordinarily Least Squares, random effects and fixed effects to estimate coefficients and relationships. The panel data used is the 1971 Longitudinal Survey of Immigrants in Canada (LSIC)1 from the Public Use Microdata File. The results of the analysis showed that dominant language fluency affects earnings differently in different countries. As the level of fluency increases so does the earnings of the immigrant. In particular, full fluency in the dominant language has a positive relationship with earnings. The project finds that an earnings premium is paid to immigrants with full fluency in the dominant language. Policy recommendations include: Improving immigrant’s access to fund for the purpose of improving their language human capital, TFW’s applying for permanent residency should be required to show proof of fluency in the dominant language, Improvement on how the point system allots points to other human capital factors that signals an immigrants ability to acquire language capital. This project is limited by the data used as it is dated. The relationship between language fluency probably has significantly changed over the last three decades. Having access to newer data would most likely result in adjustments to the policy recommendations.