Barry R. Chiswick. 1 COMPUTER USAGE, LANGUAGE PROFICIENCY AND THE EARNINGS OF IMMIGRANTS AND NATIVES by Barry R. Chiswick University of Illinois at Chicago

Barry R. Chiswick .

1

COMPUTER USAGE, LANGUAGE PROFICIENCY

AND THE

EARNINGS OFIMMIGRANTS AND NATIVES

by

Barry R. Chiswick University of Illinois at Chicago

and IZA – Inst. For the Study of Labor

Paul W. MillerUniversity of Western Australia

11-24-06

Review of the Economics of the Household -- forthcoming

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Objectives

• Estimate demand for computer usage at home

• Determine the interrelation between computer usage and other types of human capital

• Estimate the effect of computer usage on earnings

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Immigrant Labor Market Adjustment

2. Transferability of Skillsa) Between Origin and

Destinationb) Motive for Migratingc) Characteristics of Skills

1.Selectivity of Immigrantsa) Self-selectivityb) Immigration Policy

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Types of Human Capital

1. Schooling

2. Labor Market Experience

3. Information

4. Language

5. Health

6. Migration

7. Computer Skills

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Computers as a Household Public Good

2. When sum of reservation prices exceeds cost, buy computer

1. Add individual demand curves vertically.

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Data

• 2001 Australian Census

• Household File

• 1% Sample

• Males Age 20-64

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Questions• Did the person use a personal

computer at home last week?No ______

Yes______

• Did the person use the Internet anywhere last week?

(Mark all applicable boxes)

No _______

Yes, at home _______

Yes, at work _______

Yes, elsewhere _____

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B. Own and Partner’s Traits

• Age – experience (+) – cohort effects (-)

• Education (+)• Married (+)• Birthplace• Duration• Language (- if not English)• Dependent Children (+)

Demand Equation for Computer Use At Home

D. Wealth • No. of bedrooms (+)• No. of cars (+)

A. Price(Nationwide. Does not vary in cross-section.)

C. Other Relatives (?)

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Birthplace % of Sample

Computer Use (%)

Internet Use (%)

Australia 72.07 46.77 46.78

New Zealand 2.69 51.25 52.14

Other English-Speaking Developed Countries

8.57 57.55 58.40

Europe (except South Eastern Europe, United Kingdom and Ireland)

4.32 42.62 40.94

South Eastern Europe 2.31 26.14 23.41

Africa 0.49 66.93 69.38

Middle East and North Africa

1.82 32.77 32.87

South East Asia 3.17 50.85 48.29

China 1.48 61.87 59.77

Southern and Central Asia

1.49 64.13 67.36

Pacific Islands 0.61 40.63 40.50

Japan and Korea 0.39 66.67 71.50

Latin America 0.60 49.20 48.40

TOTAL 100.00 47.67 47.61

Computer & Internet Use Adult Males, 2001

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Computer Usage by Proficiency in Spoken

English (percent) Adult Males, 2001

Language Born in ForeignSpoken Australia Born Totalat Home

All Languages 46.93 50.08 47.81

Only English 46.83 55.30 48.38

Other Language by English Proficiency

Speak Very Well 52.33 58.85 56.52

Well 22.16 35.71 34.79

Not Well 17.31 15.73 15.82

Not at All 0.00 7.07 6.14


Computer Use by NativityExtract from Logit Models

Variables All Australian Born

Overseas Born

Constant -4.803(28.35)

-5.162(26.29)

-2.878(15.26)

Education 0.305(51.75)

0.312(44.79)

0.287(25.82)

Age 0.211(2.83)

0.027(3.15)

-0.020(8.29)

Age squared/100 -0.038(4.22)

-0.041(3.90)

--

Married, spouse present

-0.551(6.61)

-0.463(4.74)

-0.818(5.07)

Education of Spouse(if spouse present)

0.060(9.19)

0.055(7.14)

0.077(6.24)

No. of dependent children

0.110(8.99)

0.130(9.18)

0.052(2.20)

No. of non-dependent children

-0.162(7.40)

-0.147(5.71)

-0.195(4.68)

No. of other individuals

-0.185(5.93)

-0.221(5.74)

-0.115(2.09)

Cont’d on next slide…..


Extract from Logit Models (cont’d)

Variables All Australian Born

Overseas Born

Foreign Born 0.594(8.31)

-- --

Years Since Migration

-0.021(5.32)

-- -0.013(3.08)

Speak English Very Well

-0.089(2.11)

0.027(0.38)

-0.211(3.60)

Speak English Well

-0.831(12.71)

-0.748(3.07)

-0.842(12.12)

Speak English Not Well

-1.632(12.89)

-0.677(1.48)

-1.650(12.41)

Speak English Not at All

-1.855(4.06)

-9.468(0.09)

-1.762(3.85)

Unemployed -0.068(1.36)

-0.063(1.07)

-0.088(0.95)

Not in Labor Force -0.087(2.31)

-0.072(1.61)

-0.140(2.13)

Number of Bedrooms

0.182(11.95)

0.192(10.80)

0.150(5.11)

Number of Vehicles 0.146(10.20)

0.144(8.76)

0.161(5.46)


Probability of Computer Use by Years of Education

0

10

20

30

40

50

60

70

80

90

100

9 10 11 12 13 14 15 16 17 18 19 20

Years of Education

Proba

bility

of Co

mpute

r Use

(Pe

rcenta

ge)

Total Sample


0

10

20

30

40

50

60

70

20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60

Age (Years)

Prob

abilit

y of

Com

pute

r Us

e (P

erce

ntag

e)

Australian-Born Overseas-Born (Age only) Overseas Born (Age+YSM)

Probability of Computer Use by Age (or Age at Migration)


Probability of Computer Use by Years Since Migration

44

46

48

50

52

54

56

58

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Years Since Migration

Prob

abilit

y of

Com

pute

r Use

(Per

cent

age)

Overseas-Born (w ithout Birthplace) Australian-Born (average usage)


Earnings Functions by NativityExtract from OLS Models

Variables TotalSample

AustralianBorn

OverseasBorn

OverseasBorn

Birthplace Fixed Effects

no yes

Constant 4.942(220.29)

4.812(186.64)

5.226(5.226)

5.447(84.63)

Education 0.087(56.27)

0.095(52.49)

0.068(23.25)

0.047(10.48)

Education x Computer

– – – 0.039(7.00)

Experience 0.041(33.42)

0.044(32.00)

0.031(10.98)

0.033(11.69)

Experience squared/100

-0.071(28.37)

-0.075(26.46)

-0.055(10.40)

-0.060(13.50)

Married 0.164(20.81)

0.164(18.26)

0.167(10.00)

0.158(9.53)

Foreign Born -0.082(3.85)

-- -- --

Years Since Migration 0.004(3.70)

-- 0.004(3.59)

0.004(2.97)

Cont’d on next slide……


Extract from OLS Models (cont’d.)

Variables TotalSample

AustralianBorn

OverseasBorn

OverseasBorn

Birthplace Fixed Effects

no yes

Speak English

(Very Well) -0.079(6.37)

-0.042(2.43)

-0.105(5.97)

-0.013(0.43)

( Well) -0.227(11.17)

-0.249(3.31)

-0.242(11.34)

-0.118(3.83)

( Not Well) -0.218(7.47)

-0.266(1.84)

-0.249(8.48)

-0.140(3.81)

( Not at All) -0.459(6.71)

-0.275(38.24)

-0.519(7.59)

-0.386(5.22)

Used Computer 0.087(12.09)

0.074(9.08)

0.118(7.83)

-0.324(4.66)

Computer x Speak English

(Very Well) -- -- -- -0.076(2.19)

(Well) -- -- -- -0.139(3.24)

(Not Well) -- -- -- -0.175(2.33)


Earnings Function Coefficients

Dependent Variable: Ln Earnings

Indep. Variables Natives Immigrants

Education + .10 .07

Experience +

Married + .16 .17

Duration (yrs) for Foreign-borna +

-- .004

Eng. Fluency +

Used Computer +

Computer * Ed +

Computer * Eng +a Foreign-born catch up to native born at about 20 years


Payoff to Computer Use at Home by Nativity Quantile Regression

-0.05

0.00

0.05

0.10

0.15

0.20

0.25

0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9

Quantile

Pa

yo

ffs

to

Co

mp

ute

r U

se

Native Born (Computer) Foreign Born (Computer)


Conclusions

1. Model computers as a household public good.

2. Demand for computers increases with:

a) Own education

b) Spouse’s education

c) Married

d) Own children

e) Wealth or Permanent Income

f) English Proficiency

g) Age (non-monotonic)


Conclusions (cont’d)

3. Effects of Computers on Earnings:

Native Born 7 percent

Foreign Born 13 percent

a) Positive interaction effect with education and English language ability for Foreign Born

b) Partial effect is large relative to money cost of computers.

Documents

Barry R. Chiswick. 1 COMPUTER USAGE, LANGUAGE PROFICIENCY AND THE EARNINGS OF IMMIGRANTS AND NATIVES by Barry R. Chiswick University of Illinois at Chicago