The effects of English proficiency on labour market performance in China

Abstract

With economic development and globalization, mastering English has become a crucial skill in the labour market in China and proficiency in English is expected to increase earnings. This paper uses data from the Chinese General Social Survey (CGSS) of 2013 to estimate the determinants of English fluency and its effects on earnings in China’s labour market. The results show that gender, geography and education are the most crucial factors that are related to English speaking fluency. Males are less likely to be fluent in English than females and living in the coastal area is strongly correlated with English speaking. When the education level increases, the probability of being fluent in English also increases. Most importantly, using an OLS regression, I estimate that speaking fluent English can increase wages by about 9%. Gender, geographic variables and education are also important determinants of earnings. An IV regression is also estimated with parental education as instrument for English fluency. The returns to English fluency are higher than in the OLS regressions, but they are extremely large and imprecise, so that the results should be considered as inconclusive at this point.