Language-based earnings differentials on the Swiss labour market: is Italian a liability?

This paper examines wage rate differentials that set off speakers of Italian (Switzerland’s third national language community) from the rest of the population. Although second language skills are used here as control variables, the focus is on agents’ first language, which can be interpreted as a proxy for ethnicity. This paper uses a unique data set, and to our knowledge, is the first paper, to address the issue of language‐based inequality in Switzerland. Our chief aim is to provide an overview and to identify priorities for further research. The methodology is accordingly kept simple. After presenting general information on Switzerland′s Italian‐speaking community, we discuss the conceptual and methodological issues involved in the identification and operationalization of the data necessary to assess its relative socio‐economic status. Results show that outside the predominantly Italian‐language region of Tessin, male speakers of Italian are at a significant disadvantage on the labour market, even after controlling for the effect of other determinants of earnings, including competence in Switzerland’s other national languages. Therefore, the Swiss way of dealing with linguistic diversity, which relies on the territoriality principle (i.e., a one‐to‐one correspondence between language and territory, making for fairly homogeneous language regions), is not just an institutional arrangement; it also appears to be backed up by labour market outcomes, because interregional mobility may carry a significant cost.