Linguistic fractionalization, trade, and welfare

Tamara Gurevich, Peter Herman, Farid Toubal and Yoto Yotov

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Abstract: We examine the implications of linguistic fractionalization on trade and welfare, focusing on the United States. Our model identifies the direct and indirect effects of fractionalization on international and domestic trade and welfare. We construct a novel dataset to show that changes in fractionalization impact trade, leading to significant economic consequences. To highlight the general equilibrium implications, we conduct simulations on language policy‐induced changes in the shares and the composition of Hispanic speakers within the United States, showing the importance of considering language policies, as they can yield substantial economic benefits but also sizable economic consequences stretching beyond national borders.

Keywords: welfare; international trade; ethnolinguistic fractionalization; Domestic trade (search for similar items in EconPapers)
Date: 2025-07-25
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Published in Economic Inquiry, 2025, 63 (4), pp.1201-1231. ⟨10.1111/ecin.70003⟩

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Journal Article: Linguistic fractionalization, trade, and welfare (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05492359

DOI: 10.1111/ecin.70003

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