Language as an interaction cost: An empirical study of immigrants’ literacy performances based on their origin language

Immigration affects a society as a whole as well as having effects on the individual immigrants. First of all, individuals who want to change their location have to face the choice of the destination country. As Lalonde and Topel (1997) point out, geographic distribution of immigrants is not random, but rather depends on some factors the potential immigrants have to ponder, such as their skills and the existence of ties in the country of destination. For instance, skills will have to be expendable on the destination labour market and, if highly skilled, immigrants will have a larger options set to choose from. For this reason, language skills will be the result of systematic decisions of investment of the human capital, based on the expected costs and benefits from such allocation (Chiswick and Miller, 1995). The second key factor to be considered is ethnic concentration in the destination location. This is especially important for low skilled immigrants, which will prefer to locate in a place where a network of same community immigrants exists; in other terms, such individuals will tend to live in enclaves (Lalonde and Topel, ibid.). The existence of enclaves, however, is not associated only to low skills: since migrating has some costs, such as leaving family connections and facing another culture at arrival, living in an enclave can lower such costs, by providing social contact with similar individuals and support by the community. Therefore, once created, immigrant communities (or enclaves) will tend to exist in the long run and grow by attracting new immigrants (Lalonde and Topel, 1991). Nevertheless, living isolated from one’s community of belonging or living inside an immigrant community may have different short term and long term effects on the individual integration in the host society. In particular, while at arrival the cost of immigration may be high for immigrants that do not receive support from his community abroad, these will be obliged to adapt to the host community, thus having more occasions to interact with locals and adapt to the culture. On the other hand, immigrants who are supported by the community of belonging at arrival do, indeed, face lower initial immigration costs however, in a longer time perspective, they have fewer occasions to interact and adapt to the local culture. The initial support could be, therefore, detrimental to the immigrant individual in all aspects of his life in the host country and, specifically, in the labour market context. Although representing interesting conjectures, these remain, nevertheless, only hypothesis of which evidence is controversial. Early studies of the so-called “immigrant enclave theory” (Wilson and Portes, 1980; Portes and Manning, 1986) states that living in an immigrant enclave can have a positive effect on narrowing the earnings differential between immigrants and native, by providing useful skills to newly arrived individuals or by providing direct employment in businesses owned by same ethnicity citizens. The example provided is that of Cuban refugees in Miami, who managed to improve their labour market conditions by starting their own businesses and, subsequently, by employing other nationals in them. Nationals who worked in the self-developed business were better off than nationals that worked as employees in the host country labour market. Since then, however, the theory has been difficult to prove and, most of the recent studies find that enclaves have more negative effects on immigrants’ integration than they benefit the latter (Logan et al., 2003). For example, Chakraborty and Schuller (2022) find evidence that support the initial conjecture in studies for Sweden and Denmark on refugees and asylum seekers. The findings point to the fact that enclaves have positive effects in terms of earnings especially for low- skilled immigrants while no effect exists for high skilled ones; similarly, Xie and Gough (2011) do not find empirical support for higher earnings or higher returns to human capital for immigrants living in enclaves in the US. Similar results in terms of immigrant integration are found by Danzer and Yaman (2013), who argue that living in an enclave does, in fact, modify the incentives to learn the host country language (Chiswick and Miller, 1995) and raise the cost of interacting with natives, making such missing interactions an early warning sign leading to failed future overall integration; Chiswick and Miller (1992, 1993) find that language proficiency is, indeed, lower among immigrants who, among other factors, live in areas with a high concentration of persons of similar ethnicities. Any of the benefits deriving from enclaves concern especially low-skilled immigrants and seem to derive mainly from the quality of the enclaves, rather than their extension (Chakraborty and Schuller, 2022).

Alongside with marketable skills, such as education or training received in the origin country, linguistic skills represent a key factor in the integration of an immigrant individual, both socially and in the labour market. Analyses on the impact of language proficiency on the assimilation of immigrants suggest that the former is, indeed, a substantial variable when predicting the wellbeing of non-native speakers. One of the most used measures of immigrants assimilation is wages, in particular relative wages of immigrants or the difference between natives’ and immigrants’ wages (Chiswick, 1978; Kossoudji, 1988; Lalonde and Topel, 1997; Isphording and Otten, 2014). It is reasonable to assume wages as an assimilation measure since it is measurable and comparable throughout groups of immigrants and natives and different immigrant groups nonetheless. Language skills are part of the human capital that migrants can expend in the host country or that they will have to acquire in order to be able to interact. Thus, a lower human capital level would translate into lesser earning power (Lalonde and Topel, 1997) at arrival. Such a gap in earnings would then reduce with time, as the immigrant acquires the country-specific skills, which include language. For example, Chiswick (1978) finds a positive association between immigrants’ earnings and time spent in the US, after controlling for schooling years, marital status, labour market experience and region, suggesting that the longer the time spent in the host country the more integrated they were, as measured by the narrowing wages gap. Benefits are especially marked among more educated immigrants, whose likely gains from an improved fluency in the host country language is also due to a larger endowment of skills, which would eventually translate into higher wages (Chiswick and Miller, 1992). Convergence in immigrant wages occurs with time, as said, but immigrants can only reach a level similar to that of similar ethnicity natives (Chiswick, 1978; Lalonde and Topel, 1997) and the maximum level of convergence occurs among language-proficient immigrants, while there remains an average difference in earnings of more than 40% between language-deficient and fluent immigrants (Chiswick and Miller, 1992; 1993), with variations among occupations and industries (Lalonde and Topel, 1997), signalling significant differences among immigrants with diverse proficiency levels.