The value of language skills

Language as an economic variable

The recognition of language as an economic variable is based on four simple ideas [7]. First, reflecting the communication values of language, the economic well-being of a society is enhanced when members can communicate with each other in a single language. For example, most production activities involve teamwork and require understanding the same written and verbal instructions. Consumption activities are also facilitated by a common language, which enables buyers and sellers to understand each other. In contrast, communication in languages that not everyone understands tends to slow economic activity.

Second, there is a connection between language and cultural identity, which also influences people’s decisions about the language used for communication. Pushing to the limit the argument of the communication value of languages would imply that all of humankind would be better off speaking a single language. This is obviously not what has happened, partly because the world is not yet totally globalized, but also because there is a preference in many societies for using a native language that people value because it was received from their ancestors and defines their identity. In particular, some consumption goods, such as books, songs, and television programs, have an important linguistic component. Language and culture are closely connected.

Third, language contributes to human capital and can be developed in the same way as other productive skills. People can acquire or improve their language skills by studying languages in school, conversing with others, and so forth. Many people, especially those who belong to a linguistic minority, learn new languages because they want to expand their abilities to communicate and, by doing so, be more productive and earn higher wages [8]. When deciding what languages to learn, people tend to choose a language that has the highest financial returns. Language learning, like other investments in human capital, has opportunity costs. Becoming familiar with a new language takes time and resources that could have been devoted to other activities. In a given labor market, the interaction between supply and demand will determine the amount of language learning that takes place. Supply depends on the composition of workers’ native tongues and second language skills. Demand is determined by the various production processes, the technology, and the languages of customers and producers.

Fourth, letting individuals pursue their own interests in acquiring language skills may not lead to an optimal outcome because the advantages of using a language depend on the number of other people who speak it. There is an externality in the use of languages that is not taken into account if people pursue only their self-interests. When language is viewed mainly as a tool of communication, the natural tendency is to converge toward the efficient outcome of using a single language. Some individuals may value their cultural identity as members of a group, as reflected in part by their native language, but may nevertheless decide to switch to the language that yields the highest economic value. There is clearly a policy trade-off between linguistic uniformity, which maximizes the communication value of a language, and linguistic diversity, with emphasizes the cultural characteristics of languages.

The importance and value of language learning

In addition to their native language, received at birth, some people decide to learn a second language. This is especially likely for people who belong to a linguistic minority, or whose native tongue is not used in national or international communication. Figure 1 depicts the number of people who speak, as a first or second language, the five languages with the largest numbers of second-language speakers worldwide, along with the number of countries in which the languages are spoken.

While Mandarin has the largest total number of speakers worldwide (because of China’s large population), English is by far the most popular second language. The estimates shown in Figure 1 probably understate the true number of speakers of English as a second language because they include only countries with well-established groups that use English. If we were to add all the English learners around the world, the numbers would be some two to three times higher than shown ([4], p. 98; [9], p. 201). There is now compelling evidence that English has become the global lingua franca, the common international language of commerce and communications around the world. Mandarin (China), Hindi (India), and Spanish (Latin America) enjoy a dominant role in some regions of the world, but their influence is limited and they have fewer second-language speakers than native speakers. If English has any competition, it is French, but the competition is very weak. French shares with English the characteristic of being used more as a second language than as a first language (although the difference for French is very small) and of being spoken in many countries. A hundred years ago or so, French was a dominant international language, but its reach has declined substantially.

English is also the dominant language of some of the world’s major immigrant-receiving countries, which include Australia, Canada, and the US. For that reason, considerable research has examined immigrants’ acquisition of the dominant language of their destination country. When immigrants arrive in a country, one of their first tasks is to learn that country’s language, so that they can better integrate into the local economy.

Both the determinants and impacts of language learning in the context of international migration have been extensively researched [10]. The determinants of language learning that have been explored include exposure, efficiency, and economic incentives. The empirical evidence shows that those factors—the three Es of language learning—are important in explaining fluency in the dominant language.Exposure is related to duration in the host country, concentration of the migrant’s native language within the country, and family characteristics such as the language of the migrant’s spouse and whether the migrant has children. Exposure to a language, both before and after migration, makes a language easier to learn.Efficiency in learning a language is usually higher the younger and more educated a person is, and the smaller the linguistic distance (in vocabulary, grammar, and pronunciation, for example) between the new language and the migrant’s native language.Economic incentives are related to the anticipated duration of the stay in the new country and to expected earnings.

Many studies have also examined the labor market impacts of learning a country’s dominant language, mostly in Australia, Canada, and the US. These immigrant-receiving countries have censuses and surveys that include questions on language use and skills. Respondents assess their own language skills, generally on a scale that includes two or more skill categories. Not surprisingly, a major finding of studies that examine the acquisition of these countries’ dominant language is that knowing that language brings important returns [4], [10]. Specifically, the earnings advantage is in the order of 10–20% for people who are fluent in the dominant language compared with those who are not. Similar returns are observed for learning the dominant language in countries where English does not dominate, such as in Israel and Germany. This finding suggests that immigrants adapt primarily to the situation of the national economy of their new country or residence and not just to the dominant international language.

Little research has been done on the value to immigrants of maintaining their native language, probably because it is of little interest in the context of a country where one language clearly dominates. The few studies that have looked at this issue have generally found that for members of some minority groups, the use of the native language by migrants brings low or even negative returns [5], [11], [12]. To some extent, this finding reflects the fact that immigrants who continue to use their native language predominantly do not fully integrate into the economy and society of their new country of residence. Many migrants work in ethnic enclaves, mainly with workers who also speak their native language. The enclave economy has some advantages, in that it links immigrants to networks of fellow immigrants, but wages are generally much lower than in the mainstream economy.

Linguistic diversity also has value

The results so far clearly show that learning the dominant language is a good investment in human capital. If the primary motivation for learning a second language is the desire to communicate with more people, there should be a convergence toward a few languages or even just one. It is the case that many languages are disappearing: 367 languages have become extinct since 1950. As of 2012, of a total of 7,100 living languages, 916 languages are dying and 1,531 are in trouble [1]. These figures seem to suggest that linguistic diversity is gradually decreasing. However, looked at another way, linguistic diversity can also be seen as increasing. As a result of globalization, more and more people find themselves in situations where they have to communicate with people who speak a language different from their own [5]. One such situation arises from international migration, especially the rapidly rising migration from developing countries to developed countries.

This need to communicate across different languages makes it important to examine the impacts of linguistic diversity, which can be both negative and positive [4]. In the context of the first of the four hypotheses mentioned above on the economics of language (a population’s economic well-being is enhanced when its members can communicate in a single language), the impact of diversity is negative. This is the situation described in the biblical story of the Tower of Babel. In the beginning, all people on earth spoke the same language. They decided to build a city and a tower, called Babel, that would reach the sky so that they would not be scattered across the earth. However, seeing what they were up to, God confused their language so that they could no longer understand each other. Thus they were unable to build the tower and were scattered across the earth.

In the modern world, where linguistic conflicts can also have some costs, there are some countries, such as Belgium and Canada, that might be better off if they did not have to live with the frictions caused by having two different linguistic communities. However, the costs are probably low since the standard of living in those countries is not much different from that in more linguistically homogeneous neighboring countries. Democratic institutions can help to reduce such frictions. But in poorer, less democratic countries, there is evidence that language fragmentation can be detrimental to economic development [4].

There is some evidence that the costs of linguistic diversity are relatively small, though they are difficult to estimate. For example, providing bilingual education may raise the cost of education by 4–5% compared with the cost of monolingual education, largely because additional teaching materials and teacher training are needed [3]. However, this seems to be a burden that many people are willing to accept in order to transmit their language to the next generation.

Linguistic diversity also has benefits. These may be more difficult to measure because they are not necessarily monetary. Because of the strong link between culture and language and people’s preference for using their native language, the more languages that can be accommodated in a given society, the greater the welfare of the members of that society. In addition, people can benefit from contact with cultures different to their own. Linguistic and cultural diversity can increase the number and type of goods that are available in a society. For example, ethnic restaurants contribute to the vitality of cities.

A recent study over two decades of 160 metropolitan areas in the US provides some quantitative evidence of the monetary benefits of linguistic diversity [13]. The study considers the average wage in those cities as a function of such characteristics as education, age structure, racial composition, location, and industrial composition, plus an indicator of the linguistic diversity of the population. The study finds a strong positive link between linguistic diversity and average wages. This finding holds up under various specifications of the analytical model.

Commenting on the debate on bilingual education in the US, and in reaction to the English-only movement there, one book collected the findings of various studies of the effect of bilingual education and linguistic diversity [12]. The major message is that there are advantages to bilingualism in the US but that they are not easy to identify or measure. For example, given the large size of the Spanish-speaking community in the US, many employers report that they value workers who know Spanish in addition to English. However, these bilingual workers are not necessarily paid any more than workers whose only language is English. These companies may require their workers to know the dominant language while still viewing workers’ knowledge of a second language as an asset whose value may differ for different companies and in different contexts.

The situation is different in Europe, where many languages co-exist, though individual languages are concentrated in a particular territory. Many people learn a second or third language in addition to the dominant language in their country, usually the language of neighboring countries. In Europe, as in the rest of the world, English has become the preferred second language, especially for the younger generation [9]. Nevertheless, knowing other languages that enjoy a high enough status brings significant benefits in the labor market [4].

Support for the rights of linguistic minorities is often expressed by the intellectual and political elites of those groups. For instance, people whose work has a large linguistic component (such as novelists and singers) may have preferences for a non-dominant language that is not necessarily shared by all speakers of that language. Even if one questions to what extent the support of the intellectual and political elites reflects the views of the broader population, it is nonetheless the case that as elected officials, the political elites must represent, at least to some extent, the will of the population. Therefore, public support for maintaining a minority language can be considered an indication that people value their native language and are willing to take actions to maintain it.