Abstract
This paper investigates the economic returns to language skills and bilingualism in Kazakhstan, a multi-ethnic country that started switching its official state language from Russian to Kazakh in 1997. Using newly assembled data for four major cities in 1996 and 2010, we find heterogenous wage premia and penalties for speaking Kazakh across cities and over time. We relate the wage patterns to (i) changing demographic environments, (ii) changing gaps in school resources between schools with Russian vs. Kazakh language of instruction, and (iii) changing labour market segmentation. While wage differences narrowed in line with a balancing language policy in some cities, others experienced a rise in labour market segmentation. Regionally emerging wage penalties for Kazakh fluency might impede the formation of a bilingual society, as politically desired.