The Costs of Babylon – Linguistic Distance in Applied Economics

Arbeitspapier

Linguistic distance, i.e. the dissimilarity between languages, is an important factor influencing international economic transactions such as migration or international trade flows by imposing hurdles for second language acquisition and increasing transaction costs. To measure these costs, we suggest to use a new measure of linguistic distance. The Levenshtein distance is an easily computed and transparent approach of including linguistic distance into econometric applications. We show its merits in two different applications. First, the effect of linguistic distance in the language acquisition of immigrants is analyzed using data from the 2000 U.S. Census, the German Socio-Economic Panel, and the National Immigrant Survey of Spain. Across countries, linguistic distance is negatively correlated with reported language skills of immigrants. Second, applying a gravity model to data on international trade flows covering 178 countries and 52 years, it is shown that linguistic distance has a strong negative influence on bilateral trade volumes.

Object Details

• ISBN: 978-3-86788-389-4
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Ruhr Economic Papers ; No. 337

Classification and Topics

• Classification: Wirtschaft ; Human Capital; Skills; Occupational Choice; Labor Productivity ; Geographic Labor Mobility; Immigrant Workers ; International Migration ; Trade and Labor Market Interactions
• Subject: Linguistic distance ; immigrants ; language ; transferability ; human capital ; international trade

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Isphording, Ingo E. ; Otten, Sebastian
• Event: Veröffentlichung
• (who): Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI)
• (where): Essen
• (when): 2012

Further information

• DOI: doi:10.4419/86788389
• Handle: http://hdl.handle.net/10419/61442
• Last update: 10.03.2025, 11:44 AM CET