English Language Premium: Evidence from a policy experiment in India

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IZA Seminar

Place: Schaumburg-Lippe-Str. 9, 53113 Bonn

Date: 08.09.2009, 12:15 - 13:30


Presentation by 

Tanika Chakraborty (Indian Institute of Management)


A key question facing education policymakers in many emerging economies is whether to promote the local language, as opposed to English, in elementary schools. The dilemma is particularly strong in countries that underwent rapid globalization making English a lingua franca for international as well as domestic exchange. In this paper, we estimate the English premium in globalization globalizing economy, by exploiting an exogenous language policy intervention in India. English training was revoked from the primary grades of all public schools in the state of West Bengal. In a two-way fixed effects model we combine differences across birth cohorts and districts in the exposure to English education, to estimate the effect of the language policy on wage premium. In addition, since the policy was introduced only in the state of West Bengal, we combine other states with no such intervention to address the potential threat of differential district trends confounding our two-way estimates. Our results indicate a remarkably high English skill premium in the labor market. A 1% increase in the probability of learning English raises weekly wages by 1.6%. On the average this implies a 68% reduction in wages for those that do not learn English due to the change in language policy. We provide further evidence that occupational choice played a decisive role in determining the wage gap.

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