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One Nation, One Language? Domestic Language Diversity, Trade and Welfare

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Listed:
  • Tamara Gurevich
  • Peter R. Herman
  • Farid Toubal
  • Yoto V. Yotov

Abstract

Using new data on linguistic diversity across and within countries, we examine novel channels though which language affects trade patterns and economic welfare. We find that linguistic similarity within a country accounts for about 10 percent of estimated ‘home bias’, demonstrating the importance of shared languages for domestic integration. To highlight the general equilibrium implications of domestic language proximity, we simulate the repeal of Quebec’s Bill 101, which made French an official language in Canada and established fundamental language rights for French-speakers. The analysis demonstrates that domestic language diversity has significant implications for Canada’s welfare but also sizable economic consequences that stretch far beyond its borders.

Suggested Citation

  • Tamara Gurevich & Peter R. Herman & Farid Toubal & Yoto V. Yotov, 2021. "One Nation, One Language? Domestic Language Diversity, Trade and Welfare," CESifo Working Paper Series 8860, CESifo.
  • Handle: RePEc:ces:ceswps:_8860
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Klaus Desmet & Ignacio Ortuño-Ortín & Ömer Özak, 2022. "Is Secessionism Mostly About Income or Identity? A Global Analysis of 3,003 Subnational Regions," NBER Working Papers 30428, National Bureau of Economic Research, Inc.
    2. Tamara Gurevitch & Peter R. Herman & Farid Toubal & Yoto Yotov, 2020. "One Nation, One Language? Domestic Language Diversity, Trade and Welfare," Working Papers 2020-15, CEPII research center.
    3. Felbermayr, Gabriel & Yotov, Yoto V., 2021. "From theory to policy with gravitas: A solution to the mystery of the excess trade balances," European Economic Review, Elsevier, vol. 139(C).
    4. Yoto V. Yotov, 2021. "The Variation of Gravity within Countries (or 15 Reasons Why Gravity Should Be Estimated with Domestic Trade Flows)," CESifo Working Paper Series 9057, CESifo.
    5. Paniagua, Jordi & Peiró-Palomino, Jesús & Santana-Gallego, María, 2022. "Does happiness drive tourism decisions?," Economic Modelling, Elsevier, vol. 111(C).
    6. Yoto V. Yotov, 2022. "On the role of domestic trade flows for estimating the gravity model of trade," Contemporary Economic Policy, Western Economic Association International, vol. 40(3), pages 526-540, July.

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    More about this item

    Keywords

    common language; ethno-linguistic diversity; identity; international trade; domestic trade; domestic trade costs; welfare;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F19 - International Economics - - Trade - - - Other
    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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