Linguistic Fractionalization, Trade, and Welfare

Tamara Gurevitch, Peter Herman, Farid Toubal and Yoto Yotov

No 20048, CEPR Discussion Papers from Centre for Economic Policy Research

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: Ethnolinguistic; fractionalization (search for similar items in EconPapers)
JEL-codes: C54 D60 F14 F19 Z13 (search for similar items in EconPapers)
Date: 2025-03
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Journal Article: Linguistic fractionalization, trade, and welfare (2025)
Working Paper: Linguistic fractionalization, trade, and welfare (2025)
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