The Effects of Interregional Wage Differentials on Linguistic Heterogeneity
The Effects of Interregional Wage Differentials on Linguistic Heterogeneity

Summary/Abstract: Explanations of the ethnic composition of local labor markets usually focus on the role of community and political choices in minority policy rather than on that of economic factors. We propose to contribute to this literature by inquiring about the effect that voluntary labor migration driven by income differentials has on minority groups. We focus on the cases of Hungary, Romania, and Transylvania (the north-western province of Romania). We show that sufficiently large wage differentials produce unidirectional migration to the region with higher wages. To evaluate the effects of this type of migration, we use a three-level hierarchical CGE model. The findings indicate that, under conditions of sufficiently large interregional wage differentials, linguistic match between the receiving region and a segment of labor in the source region might lead to language skill based migration. The general conclusion is that labor liberalization under conditions of significantly large wage differentials and language preferences in the host market leads to language homogenization in formerly mixed regions.

• Details
• Contents