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IZA Discussion Paper No. 7397
May 2013
Same Same But Different: Dialects and Trade

published in: German Economic Review, 2015, 16 (3), 290-306

Language is a strong and robust determinant of international trade patterns: Countries sharing a common language trade significantly more with each other than countries using different languages, holding other factors constant. In this paper, we show that this trade-promoting effect of language is likely to reflect cultural ties, rather than lower costs of communication or similar institutions. Analyzing unique data for a single-language country, Germany, we find that similarities in the local dialect between regions have a sizable and significant positive impact on intra-national trade. We interpret this finding as evidence for the effect of culture on trade.

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Mark Fallak
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Olga Nottmeyer
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+352 585-855-501
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Christina Gathmann
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