Knowledge of catalan, publicstrongprivate sectorstrong choice and.pdfVIP

Hacienda Pública Española / Revista de Economía Pública, 197­(2/2011): 9­35 © 2011, Instituto de Estudios Fiscales Knowledge of catalan, public/private sector choice and earnings: Evidence from a double sample selection model* ANTONIO DI PAOLO** Universitat Autònoma de Barcelona (UAB) and Institut d’Economia de Barcelona (IEB) Recibido: Agosto, 2010 Aceptado: Mayo, 2011 Abstract This paper explores the earnings return to Catalan knowledge for public and private workers in Cat­ alonia. In doing so, we allow for a double simultaneous selection process. We consider, on the one hand, the non­random allocation of workers into one sector or another, and on the other, the potential self­selection into Catalan proficiency. In addition, when correcting the earnings equations, we control for the correlation between the two selectivity rules. Our findings suggest that the apparent higher lan­ guage return for public sector workers is entirely accounted for by selection effects, whereas knowl­ edge of Catalan has a significant positive return in the private sector, which is somewhat higher when the selection processes are taken into account. Keywords: Language, Sector Choice, Earnings, Simultaneous Selection, Catalonia. JEL classifications: J24, J45, J70, C31 1. Introduction The period of democracy in Spain, which started with the end of the dictatorship (1939­ 1975), has been characterized by large­scale regional devolution. The economic, legal and po­ * Acknowledgments: the author thanks Marta Masats (IDESCAT), Josep­María Martínez (IDESCAT) and Elisen­ da Vila (IDESCAT) for their special effort in supporting us with the data. Many thanks to Josep Lluís Raymond, Ada F