LANGUAGE PROFICIENCY AND WAGE PREMIUMS: A REVIEW OF ANALYTICAL MODELS WITH REFERENCE TO LITHUANIA

Abstract

This paper reviews multiple cross-national empirical studies and proposes a comparative analytical framework for the economic value of multilingualism in the Lithuanian labour market. The study draws on the concepts of human capital theory, language economics and communication efficiency models. By synthesising the main findings on multilingual labour markets, the paper shows how wage differentials related to language skills can be analysed using different statistical methods. The study uses an illustrative simulated data set based on the PIAAC methodology. The data indicate that individuals with proficiency in the national language (host-country) skills can expect an average wage premium of 18.8%. The findings of the study suggest that to strengthen the workforce in Lithuania, it would be beneficial to integrate language policy with educational and employment systems. The statistical results presented in this paper are based on a simulated dataset modelled on the PIAAC framework and do not represent empirical findings from real Lithuanian labour force data. Additionally, the proposed analytical model provides a novel perspective and addresses a specific gap in existing research on the economics of multilingualism in Lithuania. The framework highlights policy levers such as transparent language requirements, targeted L2 support, and recognition of minority language capital—that can operationalise sustainable multilingualism, i.e., maintain linguistic diversity while improving equitable labour-market access in Lithuania.