Fractionalisation at the Micro-Level: Economic Returns to Speaking the Right Language(s) in a Multilinguistic Society

This paper investigates the economic returns to language skills and bilingualism. The analysis is staged in Kazakhstan, a multi-ethnic country that has switched its official state language from Russian to Kazakh since 1997. Using two newly assembled data sets, we find negative returns to speaking Kazakh and a negative effect of bilingualism on earnings while Russian was the official state language in the 1990s. Since neither sectoral segmentation, nor reverse causality can explain our findings, we argue that the most likely source for the earnings disadvantage was (language) discrimination. Surprisingly, the Kazakh language continues to yield a negative wage premium 13 years after it has been made official state language. Since discrimination against the titular language is implausible, we explain the low economic value of the Kazakh language in 2010 by the deteriorated quality of schools with Kazakh as language of instruction. Based on PISA data, we illustrate that scholastic achievements are substantially lower for pupils taught in Kazakh, despite the official support for the titular language. Our results suggest that switching the official state language without appropriate investments in school resources is unlikely to cure the economic disadvantage of a previously marginalized language.