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Language differences, cultural identity, and innovation

Chang'an Wang, Junqian Wu, Jianqing Ruan and Xiaoqian Liu

Growth and Change, 2022, vol. 53, issue 4, 1716-1736

Abstract: Cultural variations caused by language differences hinder technology diffusion and economic development. Using China's city‐level data, we analyze the effect of language differences in cities on innovation. The result shows the larger the language differences within a city, the lower the innovation of that city. Then, using historical immigration data as an instrumental variable, we find the result is robust. Furthermore, by excluding the competitive channel, language communication, through which language differences influence innovation, we conclude the main channel is cultural identity.

Date: 2022
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