Association for Public Policy Analysis & Management

With about 20 percent of the US population now comprising of foreign language speakers, an increasing number of residents may be confronted with issues that may affect their labor market outcomes. For example, there are variations in requirements for obtaining a driver’s license across states, some of which offer English-only driver’s license examinations. This paper attempts to investigate the plausible causal link between language restrictions for obtaining a driver’s license and unemployment, wages and hours worked among the immigrant population that speak neither English nor Spanish at home. This study finds that an immigrants residing in states that offer driver’s license testing in two or fewer languages (including English) work less hours and earn lower wages than their counterparts in other states. There is no evidence of any effects on their likelihood of being unemployed. These results are consistent after controlling for endogeneity when propensity score matching techniques are employed.