Barry R. Chiswick. 1 COMPUTER USAGE, LANGUAGE PROFICIENCY AND THE EARNINGS OF IMMIGRANTS AND NATIVES by Barry R. Chiswick University of Illinois at Chicago and IZA – Inst. For the Study of Labor Paul W. Miller University of Western Australia Review of the Economics of the Household -- forthcoming

Barry R. Chiswick2 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

Barry R. Chiswick3 Immigrant Labor Market Adjustment 2. Transferability of Skills a)Between Origin and Destination b)Motive for Migrating c)Characteristics of Skills 1.Selectivity of Immigrants a) Self-selectivity b) Immigration Policy

Barry R. Chiswick4 Types of Human Capital 1.Schooling 2.Labor Market Experience 3.Information 4.Language 5.Health 6.Migration 7.Computer Skills

Barry R. Chiswick5 Computers as a Household Public Good 2. When sum of reservation prices exceeds cost, buy computer 1. Add individual demand curves vertically.

Barry R. Chiswick6 Data 2001 Australian Census Household File 1% Sample Males Age 20-64

Barry R. Chiswick7 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 _____

Barry R. Chiswick8 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 (?)

Barry R. Chiswick9 Birthplace% of Sample Computer Use (%) Internet Use (%) Australia New Zealand Other English- Speaking Developed Countries Europe (except South Eastern Europe, United Kingdom and Ireland) South Eastern Europe Africa Middle East and North Africa South East Asia China Southern and Central Asia Pacific Islands Japan and Korea Latin America TOTAL Computer & Internet Use Adult Males, 2001

Barry R. Chiswick 10 Computer Usage by Proficiency in Spoken English (percent) Adult Males, 2001 Language Born in Foreign Spoken Australia Born Total at Home All Languages Only English Other Language by English Proficiency Speak Very Well Well Not Well Not at All

Barry R. Chiswick 11 Computer Use by Nativity Extract from Logit Models Variables All Australian Born Overseas Born Constant (28.35) (26.29) (15.26) Education0.305 (51.75) (44.79) (25.82) Age0.211 (2.83) (3.15) (8.29) Age squared/ (4.22) (3.90) -- Married, spouse present (6.61) (4.74) (5.07) Education of Spouse ( if spouse present) (9.19) (7.14) (6.24) No. of dependent children (8.99) (9.18) (2.20) No. of non-dependent children (7.40) (5.71) (4.68) No. of other individuals (5.93) (5.74) (2.09) Cont’d on next slide…..

Barry R. Chiswick 12 Extract from Logit Models (cont’d) VariablesAllAustralian Born Overseas Born Foreign Born0.594 (8.31) -- Years Since Migration (5.32) (3.08) Speak English Very Well (2.11) (0.38) (3.60) Speak English Well ( 12.71) (3.07) (12.12) Speak English Not Well (12.89) (1.48) (12.41) Speak English Not at All (4.06) (0.09) (3.85) Unemployed (1.36) (1.07) (0.95) Not in Labor Force (2.31) (1.61) (2.13) Number of Bedrooms (11.95) (10.80) (5.11) Number of Vehicles0.146 (10.20) (8.76) (5.46)

Barry R. Chiswick13 Probability of Computer Use by Years of Education

Barry R. Chiswick14 Probability of Computer Use by Age (or Age at Migration)

Barry R. Chiswick15 Probability of Computer Use by Years Since Migration

Barry R. Chiswick 16 Earnings Functions by Nativity Extract from OLS Models VariablesTotal Sample Australian Born Overseas Born Overseas Born Birthplace Fixed Effects noyes Constant4.942 (220.29) (186.64) (5.226) (84.63) Education (56.27) (52.49) (23.25) (10.48) Education x Computer ––– (7.00) Experience (33.42) (32.00) (10.98) (11.69) Experience squared/ (28.37) (26.46) (10.40) (13.50) Married (20.81) (18.26) (10.00) (9.53) Foreign Born (3.85) -- Years Since Migration (3.70) (3.59) (2.97) Cont’d on next slide……

Barry R. Chiswick17 Extract from OLS Models (cont’d.) VariablesTotal Sample Australian Born Overseas Born Overseas Born Birthplace Fixed Effects noyes Speak English (Very Well) (6.37) (2.43) (5.97) (0.43) ( Well) (11.17) (3.31) (11.34) (3.83) ( Not Well) (7.47) (1.84) (8.48) (3.81) ( Not at All) (6.71) (38.24) (7.59) (5.22) Used Computer0.087 (12.09) (9.08) (7.83) (4.66) Computer x Speak English (Very Well) (2.19) (Well) (3.24) (Not Well) (2.33)

Barry R. Chiswick 18 Earnings Function Coefficients Dependent Variable: Ln Earnings Indep. VariablesNativesImmigrants Education Experience + Married Duration (yrs) for Foreign-born a Eng. Fluency + Used Computer + Computer * Ed + Computer * Eng + a Foreign-born catch up to native born at about 20 years

Barry R. Chiswick19 Payoff t o Computer Use at Home by Nativity Quantile Regression

Barry R. Chiswick20 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)

Barry R. Chiswick21 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.