Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/232457 
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 8860
Publisher: 
Center for Economic Studies and Ifo Institute (CESifo), Munich
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.
Subjects: 
common language
ethno-linguistic diversity
identity
international trade
domestic trade
domestic trade costs
welfare
JEL: 
D60
F14
F19
C54
Z13
Document Type: 
Working Paper
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