Same Same But Different: Dialects and Trade
21 Pages Posted: 6 Jun 2013
Date Written: May 31, 2013
Language is a strong and robust determinant of international trade patterns: Countries sharing a common language trade significantly more with each other than countries using different languages, holding other factors constant. In this paper, we show that this trade-promoting effect of language is likely to reflect cultural ties, rather than lower costs of communication or similar institutions. Analyzing unique data for a single-language country, Germany, we find that similarities in the local dialect between regions have a sizable and significant positive impact on intra-national trade. We interpret this finding as evidence for the effect of culture on trade.
Keywords: language, culture, trade costs, gravity
JEL Classification: F140, F150, Z100
Suggested Citation: Suggested Citation