Working Paper: NBER ID: w24694
Authors: Klaus Desmet; Joseph Gomes; Ignacio Ortuno-OrtÃn
Abstract: This paper analyzes the importance of local interaction between individuals of different linguistic groups for the provision of public goods at the national level. The micro-founded conceptual framework we develop predicts that a country's public goods (i) decrease in its overall linguistic fractionalization, and (ii) either increase or decrease in its local learning multiplier, a measure of how local interaction affects antagonism towards other groups in the society at large. After constructing a 5 km by 5 km dataset on language use for 223 countries, we empirically explore these theoretical predictions. While overall fractionalization worsens public goods outcomes, we find a positive causal effect of local learning. Conditional on a country's overall diversity, public goods outcomes are maximized when there are a few large-sized groups and the diversity of each location mirrors that of the country as a whole. Our large-scale study, spanning the entire globe, confirms experimental micro-evidence in favor of contact theory.
Keywords: linguistic diversity; geographic diversity; public goods; contact theory; conflict theory; antagonism; local learning
JEL Codes: H40; O18; O57; R1; Z10; Z13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| overall linguistic fractionalization (F12) | public goods provision (H41) |
| local learning multiplier (C59) | public goods provision (H41) |