Using the interaction of language of country of birth and age-at-arrival as instruments, we find strong evidence of a causal effect of English as Additional Language (EAL) on the native–immigrant wage gap for male employees in the UK.

This work demonstrates the very existence of economic rents in franchising using, for the first time, the franchisees’ actual financial statements. This finding makes franchising more appealing for applicants and supports the hypothesis that rents are efficient devices to motivate franchisees.