Understanding Ethnolinguistic Differences: The Roles of Geography and Trade

The impact of ethnic divisions on economic growth and development are well understood, yet there is little known about the source of these divisions. In this study I take the economic importance of group differences as given, and examine how geography and trade shape inter-ethnic linguistic differences in the long run. I construct a georeferenced data set to examine the border region of spatially adjacent ethnic groups, together with variation in the set of potentially cultivatable crops at the onset of the Columbian Exchange, to identify how variation in land productivity impacts linguistic differences between adjacent ethnic groups. I find that ethnic groups separated across geographic regions with high variation in land productivity are more similar in language than groups separated across more homogeneous regions. I argue that inter-ethnic trade is the link connecting geographic variations to linguistic variations, and develop a model to clarify the proposed mechanism: the historical gains from trade are greatest in regions with large variations in land endowments, and the frequency of inter-ethnic trade mediates the process of drift between groups. I find strong support for this mechanism, including direct evidence of a causal link between land productivity variation and an ethnic group’s reliance on trade for food and subsistence in pre-modern times.