Foreign language skills and labor market outcomes: The case of English in Mexico

Abstract

This paper examines the labor market effects of English instruction in the context of a developing, non-English-speaking country. I leverage a natural experiment in Mexico, where six states introduced English as a subject in public elementary schools during the 1990s. Using individual-level data from the 2014 Subjective Well-being Survey, which uniquely includes a self-reported measure of English-speaking ability, I estimate the causal effects of these policy changes using a staggered Difference-in-Differences design with robust estimators that account for treatment effect heterogeneity. The results indicate that state English programs increased English proficiency, especially among individuals from higher-income households and those with more educated parents. However, despite this improvement in language skills, the programs had no significant effect on wages. I show that this null effect is consistent with general equilibrium dynamics: the interventions expanded labor supply, particularly among women and low-educated individuals, but did not raise labor demand sufficiently to generate wage gains. Complementary analyses show no impact on higher education enrollment, domestic or international migration, or shifts between formal and informal employment. These findings suggest that while early exposure to English instruction can increase language proficiency and labor force participation, the broader economic benefits may be limited in the absence of complementary labor demand shocks. This contributes new evidence to the literature on language skills and labor markets, highlighting the importance of considering equilibrium effects and workforce composition when evaluating education policies.