The LEP Earnings Penalty Among Hispanic Men in the US: 1980 to 2005

Abstract

Workers in the US lacking English-language fluency earn less on average than their English-proficient counterparts, although this limited-English-proficient (LEP) earnings "penalty" has not remained stable over time. Using Integrated Public Use Microdata Series data from the 1980, 1990, and 2000 decennial US censuses as well as the 2005 American Community Survey, we show that this average penalty seemingly fell between 1980 and 2005 for Hispanic men in the US. We interpret this decline as evidence that an increase in the relative demand for LEP Hispanics could have offset the increase in their relative labor supply, particularly during the 1980s. However, when comparing workers who completed high school with those who did not, this penalty increased among high school graduates during this time. This policy-relevant finding is consistent with the increasing returns to skill observed in the US during the past couple of decades.