IZA DP No. 7841: The Causal Effect of Deficiency at English on Female Immigrants' Labor Market Outcomes in the UK
forthcoming in: Applied Economics Letters (DOI: 10.1080/13504851.2020.1753873) as "The Effect of Deficiency at English on Female Immigrants’ Wage in the UK: Correcting for measurement error, endogenous treatment, and sample selection bias".
We investigate the extent to which deficiency at English as measured by English as Additional Language (EAL), contribute to the immigrant-native wage gap for female employees in the UK, controlling for covariates. To deal with the endogeneity of EAL and a substantial problem of self-selection into employment we suggest a 3-step estimator (TSE). The properties of this estimator are investigated in a Monte Carlo simulation study and we show evidence that TSE delivers a consistent and asymptotically normal estimator. We find a large and statistically significant causal effect of EAL on the immigrant-native wage gap for women.