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The aim of this paper is to find out how ethnicity and Estonian language skill affect labour market entry in Estonia. This paper focuses on the quality of the first job of ethnical Estonians and non-Estonians in the years 1991–1997 and 2001–2006. The main question is to what extent ethnicity and Estonian language skill influence the occupational attainment of youth in their first job. The data to be used are taken from Estonian Labour Force Surveys conducted in the years 1995, 1997 and 2002–2006. Results from linear regression analysis indicate that although the investment in country-specific human capital gives some advantages to non-Estonian youth, still Estonian language proficient non-Estonians are less successful labour market entrants compared to ethnic Estonians. Thus both ethnicity and Estonian language skill have a significant effect on the occupational status in the first job. Although education is important in shaping labour market opportunities of the youth, it appears that returns from education differ between ethnic groups. In addition, the investment in Estonian language skills gave higher returns in terms of occupational status in the period 1991–1997, whereas in the years 2001– 2006 Estonian proficient non-Estonians reached considerably lower occupational status in their first job than Estonians.

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