Language nuances, trust and economic growth

Abstract

Language serves two key functions. It enables communication between agents, which allows the set-up and functioning of formal and informal institutions. It also serves a less obvious function, as it provides a reassuring quality more closely related with issues linked with trust, social capital, and cultural identification. While research on the role of language as a learning process is widespread, there is no evidence on the role of language as a signal of cultural affinity. We pursue this latter avenue of research and show that subtle language affinity is positively linked with change in earnings when using English-speaking data for cities in the Golden Horseshoe area in Southern Ontario during the period 1991 to 2001. The results are robust to changes in specification, and a broad number of empirical tests. © Springer Science+Business Media, LLC 2009.