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Economic Effect of Language Ability on Income and Employment: The Evidence from China

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  • Lucong Wang
  • Jingchao Dai

Abstract

As a tool of communication and a carrier of information, language learning needs to pay the price and cost, language ability is also a form of human capital, which has an impact on income and employment. In order to found the economics effects of language ability, we studied relationship between language ability and income using China Family Panel Studies (CFPS) data from 2010 to 2016. We found that improvement of both Mandarin proficiency and English proficiency can significantly promote the total income and wage income. Considering the missing variables in the model and the endogeneity problem of reverse causality, instrumental variables were used to deal with the endogeneity problem, and the income effect of language ability still existed. From the perspective of the influence mechanism, social capital is an important channel through which language ability affects the total income of employees.

Suggested Citation

  • Lucong Wang & Jingchao Dai, 2023. "Economic Effect of Language Ability on Income and Employment: The Evidence from China," International Journal of Business and Management, Canadian Center of Science and Education, vol. 16(2), pages 1-54, February.
    • Handle: RePEc:ibn:ijbmjn:v:16:y:2023:i:2:p:54
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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