Changing Language Skills and Trade in Europe

Michael Rindler

VfS Annual Conference 2021 (Virtual Conference): Climate Economics from Verein für Socialpolitik / German Economic Association

Abstract: I investigate the effect of changing language skills on trade using an unique panel data set on spoken language. It tracks over thirty, mostly European, countries from the mid-90s to the beginning of the 2010s. In this period, European countries have witnessed an advancing trade integration and large changes in foreign language knowledge. I estimate a significant and positive effect of changing common English skills on trade using the gravity model and controlling for endogeneity by pair fixed effects and a globalization trend. General equilibrium welfare analysis shows that all countries except for Russia profited from the rise in the percentage of English speakers. Further, in a re-estimation of Fidrmuc and Fidrmuc (2016), I find a significant causal impact of aggregate common spoken language on trade, but not for any specific language.

Keywords: language; international trade; gravity model (search for similar items in EconPapers)
JEL-codes: F14 F15 Z13 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc21:242449

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