Culture, Trust & the Economy
Language and Economic Life
How the languages people speak affect their jobs and earnings, the value of English in India, and the economics of multilingual societies.
Language is a skill with economic value. The languages people speak can shape which jobs they can do, how much they earn and how easily they can trade and communicate.
Language as human capital
Economists treat language skills as a form of human capital. Knowing a widely used language opens access to more jobs, markets and information.
The English premium in India
In India, English is widely used in higher education, business, technology, law and government. Research by Mehtabul Azam, Aimee Chin and Nishith Prakash found that Indian men who spoke English fluently earned substantially more, on average around a third more, than those who did not speak English, even after accounting for other factors. This English premium helps explain strong demand for English-medium education among Indian families.
The trade-off
At the same time, children often learn best in their home language, especially in early grades. India’s National Education Policy 2020 encourages teaching in the mother tongue or local language at least until Class 5 where possible. Policymakers balance the benefits of home-language learning with the economic value of English and other widely used languages.
Linguistic diversity
Countries with many languages face costs of communication and coordination but also gain cultural richness. India’s constitution recognises 22 scheduled languages. Language differences can affect internal migration: people may be less likely to move to regions where a different language is spoken.
Technology and language
AI translation and speech tools are reducing language barriers, potentially lowering the English premium over time and helping speakers of Indian languages access information and services in their own languages.
Two graduates from the same college apply for a customer service job with an international company. One speaks fluent English; the other speaks Hindi and Marathi fluently but little English. The company hires the English speaker, as its clients are overseas. Language skills, rather than intelligence, decide the outcome.
Local languages are essential for communication, learning, culture and many jobs. The economic value of different languages depends on the job and market, and technology is changing it.
- Language skills are a form of human capital with economic value.
- Research found fluent English speakers in India earned around a third more on average.
- India's education policy encourages early teaching in home languages.
- Translation technology may reduce language barriers over time.
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