Dialects, Cultural Identity, and Economic Exchange

Abstract

We study the effect of cultural ties on economic exchange using a novel measure for cultural identity: dialect similarity across regions of the same country. We evaluate linguistic micro-data from a unique language survey conducted between 1879 and 1888 in about 45,000 German schools. The recorded geography of dialects comprehensively portrays local cultural ties that have been evolving for centuries, and provides an ideal opportunity to measure cul-tural barriers to economic exchange. In a gravity analysis, we then show that cross-regional migration flows in the period 2000–2006 are positively affected by historical dialect similari-ty. Using different empirical strategies, we show that this finding indicates highly time-persistent cultural borders that impede economic exchange even at a fine geographical scale.