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The Costs of Babylon—Linguistic Distance in Applied Economics

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  • Ingo Eduard Isphording
  • Sebastian Otten

Abstract

Linguistic distance, i.e. the dissimilarity between languages, is an important factor influencing international economic transactions such as migration or international trade flows by imposing hurdles for second language acquisition and increasing transaction costs. To measure these costs, we suggest to use a new measure of linguistic distance. The Levenshtein distance is an easily computed and transparent approach of including linguistic distance into econometric applications. We show its merits in two different applications. First, the effect of linguistic distance in the language acquisition of immigrants is analyzed using data from the 2000 U.S. Census, the German Socio-Economic Panel, and the National Immigrant Survey of Spain. Across countries, linguistic distance is negatively correlated with reported language skills of immigrants. Second, applying a gravity model to data on international trade flows covering 178 countries and 52 years, it is shown that linguistic distance has a strong negative influence on bilateral trade volumes.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Review of International Economics.

Volume (Year): 21 (2013)
Issue (Month): 2 (05)
Pages: 354-369

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Handle: RePEc:bla:reviec:v:21:y:2013:i:2:p:354-369

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  1. Cristina Fernández & Carolina Ortega, 2008. "Labor market assimilation of immigrants in Spain: employment at the expense of bad job-matches?," Spanish Economic Review, Springer, Springer, vol. 10(2), pages 83-107, June.
  2. Alicia Adsera & Mariola Pytlikova, 2012. "The role of language in shaping international migration," Norface Discussion Paper Series, Norface Research Programme on Migration, Department of Economics, University College London 2012014, Norface Research Programme on Migration, Department of Economics, University College London.
  3. Felbermayr, Gabriel & Toubal, Farid, 2010. "Cultural proximity and trade," Munich Reprints in Economics, University of Munich, Department of Economics 20351, University of Munich, Department of Economics.
  4. Ku, Hyejin & Zussman, Asaf, 2010. "Lingua franca: The role of English in international trade," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 75(2), pages 250-260, August.
  5. Gil Epstein & Ira Gang, 2010. "Migration and Culture," CReAM Discussion Paper Series 1020, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  6. Chiswick, Barry R & Miller, Paul W, 1995. "The Endogeneity between Language and Earnings: International Analyses," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 13(2), pages 246-88, April.
  7. Isphording, Ingo E. & Otten, Sebastian, 2014. "Linguistic Barriers in the Destination Language Acquisition of Immigrants," IZA Discussion Papers 8090, Institute for the Study of Labor (IZA).
  8. repec:hal:journl:halshs-00641280 is not listed on IDEAS
  9. Chiswick, Barry R. & Miller, Paul W., 2004. "Linguistic Distance: A Quantitative Measure of the Distance Between English and Other Languages," IZA Discussion Papers 1246, Institute for the Study of Labor (IZA).
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Cited by:
  1. Ingo Isphording, 2013. "Returns to Local and Foreign Language Skills – Causal Evidence from Spain," Ruhr Economic Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen 0398, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  2. George J. Borjas, 2013. "The Slowdown in the Economic Assimilation of Immigrants: Aging and Cohort Effects Revisited Again," NBER Working Papers 19116, National Bureau of Economic Research, Inc.
  3. Antonio Di Paolo & Aysit Tansel, 2013. "“Returns to Foreign Language Skills in a Developing Country: The Case of Turkey”," AQR Working Papers, University of Barcelona, Regional Quantitative Analysis Group 201311, University of Barcelona, Regional Quantitative Analysis Group, revised Nov 2013.
  4. Isphording, Ingo E. & Otten, Sebastian, 2014. "Linguistic Barriers in the Destination Language Acquisition of Immigrants," IZA Discussion Papers 8090, Institute for the Study of Labor (IZA).
  5. Chiswick, Barry R. & Miller, Paul W., 2014. "International Migration and the Economics of Language," IZA Discussion Papers 7880, Institute for the Study of Labor (IZA).
  6. Alberto Alesina & Johann Harnoss & Hillel Rapoport, 2013. "Birthplace Diversity and Economic Prosperity," NBER Working Papers 18699, National Bureau of Economic Research, Inc.
  7. Isphording, Ingo E., 2013. "Disadvantages of Linguistic Origin: Evidence from Immigrant Literacy Scores," IZA Discussion Papers 7360, Institute for the Study of Labor (IZA).
  8. Fidrmuc, Jan & Fidrmuc, Jarko, 2009. "Foreign Languages and Trade," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7228, C.E.P.R. Discussion Papers.

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