<p><strong>Within Currency Areas</strong></p>

<p>This is not going to be exactly what you're asking for, which also goes into the realms of trade, but:</p>

<p>The use of common language is extremely important. Many Economists consider the lack of common language to be one of the main reasons of the failure of the Euro zone. </p>

<p><strong><a href="http://en.wikipedia.org/wiki/Optimum_currency_area" rel="nofollow">Optimum Currency Area</a></strong> theory says that even if the regions are not exactly the same, flows of workers across the regions will equalize returns and lead to convergence within the currency area. The lack of flows within the EURO area was mostly blamed on language barriers. Consequently, the tensions within the area increased and made optimal monetary policy for the union as a whole a pretty difficult task.</p>

CC BY-SA 3.0
2015-02-04T17:52:52.487Z
2015-05-10T10:54:19.343Z
2015-05-10T10:54:19.343Z
FooBar
<p>I understand the economic evidence towards language unification is probably very positive. </p>

<p>But I would note it may have some negative effects on research and development. Establishing a single language lowers the diversity of human language possibly playing a role in learning and technological growth.  It may also lower the value of some types of language-important leisure time.  </p>

<p>Outside of our field, beliefs about this particular subject are rather strong. </p>

<p><a href="http://www.scientificamerican.com/article/does-language-shape-what/" rel="nofollow">http://www.scientificamerican.com/article/does-language-shape-what/</a></p>

CC BY-SA 3.0
2015-05-19T01:36:42.830Z
Adopting an international *auxiliary* language wouldn't *necessarily* lead to fewer languages (though that may be the trend regardless). Indeed, one might be more freed up to learn a language of choice when not preoccupied with learning multiple lingua francas.
Brett Zamir
CC BY-SA 3.0
2015-05-19T01:40:32.797Z
I'm not sure your point in citing the language article, but the at least extreme view of the Sapir-Whorf hypothesis (i.e., of language determining thought) is rejected by linguists. That is interesting about it having a mnemonic effect, but a different language doesn't fundamentally change our thought, so we need not fear that the choice of an international auxiliary language would do so either.
Brett Zamir
CC BY-SA 3.0
2015-05-19T01:42:50.757Z
As far as loss of diversity to posterity, I think linguists have pretty much documented all living languages, and we can't compel people to keep their languages (though we are not proposing compelling anyone to abandon them either--merely to decide on a single common extra language). As far as learning or technological growth, I can only see that the need to employ people for translation (assuming one even becomes aware of a subject for learning (or a technological opportunity) given a lack of means of communication) in either case is majorly burdensome.
Brett Zamir
CC BY-SA 3.0
2015-05-19T14:08:33.453Z
Sure, but if language choice has even moderate effects on cognitive function, there could be some contrived circumstance in which a common language impairs the development of .... some technology, like an efficient coding language, or leisure product (like a poem, perhaps?).  I think this would be rare, but cultural change is hardly as cut and dry as we economists would like to think.
RegressForward
CC BY-SA 3.0
2015-05-19T15:07:19.977Z
Very good point though I think it is more an advantage of linguistic diversity rather than a disadvantage of a common language. In the absence of a common lingua franca, it is less likely that any such innovations grounded in linguistic diversity will get discovered since not every good idea bubbles up solely based on its merits.
Brett Zamir
CC BY-SA 3.0
2015-05-20T07:35:43.587Z
Just came across this article, for example, which shows how preoccupied students are in Zimbabwe in learning different languages, while apparently lacking resources to focus on their own languages: http://www.ibtimes.com/zimbabwe-proposes-compulsory-chinese-lessons-stirring-controversy-1929317
Brett Zamir
CC BY-SA 3.0
2015-05-10T05:53:48.030Z
2015-05-10T20:20:22.083Z
2015-05-10T20:20:22.083Z
RegressForward
<p>These two papers seem relevant. The large Indian wage premium for English language fluency suggests that there would be significant returns at the margin to providing services through trade instead of locally, but they are limited by the supply of foreigners with the right language skills.  However, these premiums are largest among the skilled workers, suggesting that the benefits of a universal language would also accrue disproportionately (in absolute wage premia) to the most skilled.   </p>

<blockquote>
  <p>Recent studies have shown that trade liberalization increases skilled
  wage premiums in developing countries. This result suggests
  globalization may benefit elite skilled workers relatively more than
  poor unskilled workers, increasing inequality. This effect may be
  mitigated, however, if human capital investment responds to new global
  opportunities. A key question is whether a country with a more
  elastic human capital supply is better positioned to benefit from
  globalization. I study how the impact of globalization varies across
  Indian districts with different costs of skill acquisition. <strong>I focus on
  the cost of learning English, a relevant qualification for high-skilled
  export jobs. Linguistic diversity in India compels individuals to
  learn either English or Hindi as a lingua franca.</strong> Some districts have
  lower relative costs of learning English due to linguistic
  predispositions and psychic costs associated with past nationalistic
  pressure to adopt Hindi. I demonstrate that <strong>districts with a more
  elastic supply of English skills benefited more from globalization:
  they experienced greater growth in both information technology jobs
  and school enrollment.</strong> Consistent with this human capital response,
  they experienced smaller increases in skilled wage premiums.</p>
</blockquote>

<p><a href="http://www.cgdev.org/doc/events/1.18.08/shastry_ITandEducation_0108.pdf" rel="nofollow">Human Capital Response to Globalization: Education and Information Technology in India</a></p>

<blockquote>
  <p>India's colonial legacy and linguistic diversity give English an
  important role in its economy, and this role has expanded due to
  globalization in recent decades. It is widely believed that there are
  sizable economic returns to English-language skills in India, but the
  extent of these returns is unknown due to lack of a microdata set
  containing measures of both earnings and English ability. In this
  paper, we use a newly available data set - the India Human Development
  Survey, 2005 to quantify the effects of English-speaking ability on
  wages. <strong>We find that being fluent in English (compared to not
  speaking any English) increases hourly wages of men by 34%, which is
  as much as the return to completing secondary school and half as much
  as the return to completing a Bachelor's degree. Being able to speak a
  little English significantly increases male hourly wages 13%. There is
  considerable heterogeneity in returns to English. More experienced and
  more educated workers receive higher returns to English.</strong> The
  complementarity between English skills and education appears to have
  strengthened over time. Only the more educated among young workers
  earn a premium for English skill, whereas older workers across all
  education groups do.</p>
</blockquote>

<p><a href="http://w.cream-migration.org/publ_uploads/CDP_02_10.pdf" rel="nofollow">The Returns to English-Language Skills in India</a></p>

<p>Here is a natural experiment that provides an example of the negative effect of the opening of labor markets on the existing population the new workers will compete with (in this case, the arrival of Russian mathematicians on Western mathematicians' wages and job prospects). </p>

<blockquote>
  <p>The fall of the Iron Curtain in late 1991 ended nearly 70 years of
  isolation of Soviet mathematicians from the world mathematical
  community. Suddenly free to travel and emigrate, approximately 1000
  Soviet mathematicians, mostly highly productive researchers, relocated
  to other countries. Three-hundred-thirty-six scientists came to the
  United States.</p>
  
  <p>During the decades of scant contact with foreign colleagues, Russian
  mathematicians, for political reasons that Borjas and Doran explain,
  concentrated on certain fields that tended to get much less attention
  in the West. American mathematicians, meanwhile, had moved ahead in
  areas that Russians largely ignored. When the émigrés arrived in
  America, therefore, they had a great impact on certain mathematical
  fields but much less on others.</p>
  
  <p>These differential impacts allow Borjas and Doran to compare what
  happened in fields heavily and lightly affected by the influx and to
  analyze what a large infusion of new talent and ideas does to a field
  of research. Combining information from several large databases, they
  track the productivity and affiliations of the Russian and American
  mathematicians. Their inquiry concentrates on two major effects; the
  “knowledge shock” from all of the new approaches and insights suddenly
  available to American mathematics, and the “labor market shock” from
  all the new people suddenly on the American mathematics job market.</p>
  
  <p>What they found does not support what Borjas calls the conventional
  “rubbing-off” theory, which holds that if “we get all these highly
  skilled immigrants, … somehow there’s a rubbing-off effect that makes
  you and me more innovative.”</p>
  
  <p>Since the fields with heavy Russian influence had “incredibly bright
  new mathematicians coming in, with all these new theorems, all these
  new techniques flooding the market, you would expect that people
  working in those areas are going to learn quite a lot from them,”
  Borjas says. “At the same time, the number of academic jobs where
  mathematical research is actually done is really not increasing all
  that much. So something has to give.”</p>
  
  <p>That something, the study found, was the career prospects and
  productivity of many of the mathematicians already here. “When you
  increase the number of very smart people in a field by a substantial
  amount,” Borjas says, “… not everybody benefits. The typical
  pre-existing American mathematician actually lost out.”</p>
  
  <p><strong>That’s because “a generation of American mathematicians at the very
  peak of their mathematical efficiency by luck just happened to
  graduate at the same time these Russians [were] coming in,” Borjas
  explains. The people of that young generation lost the most. Faculty
  members protected by tenure kept their jobs, but mathematicians who
  had not yet attained it found themselves facing sharply heightened
  competition, which produced an “unprecedented 12 percent unemployment
  rate for new American mathematics PhDs” and “a dramatic decrease in
  the probability of obtaining a position in research universities,” the
  article says. The overall unemployment rate for college graduates,
  meanwhile, was dropping rapidly, from 3.2% to 2.2% between 1992 and
  1996. Many of the young mathematicians in heavily affected fields ended up moving to lower-ranking institutions or leaving academic
  mathematics altogether.</strong></p>
  
  <p>The situation “drove a lot of American mathematicians into Wall
  Street,” Borjas says. There, in their new role as “quants”
  (quantitative analysts), they turned their talents to inventing
  intricate financial instruments. Ironically, one of Borjas’s
  colleagues has joked, the migration from the formerly communist
  country probably helped to fuel the 2008 economic crisis that nearly
  <a href="http://sciencecareers.sciencemag.org/career_magazine/previous_issues/articles/2012_03_02/caredit.a1200024" rel="nofollow">> brought down American capitalism.
  Taken for Granted: Foreign Invasion</a> </p>
</blockquote>

CC BY-SA 3.0
2015-02-04T19:50:53.543Z
+1 as these are good finds and of interest, and I think you are probably right about the disproportionate benefit to skilled workers, but I'm also looking for info on how a lingua franca may provide a relative disadvantage, e.g., if introducing English overwhelmed say the domestic film industry because of competition from more readily understood films coming from outside (e.g., Hollywood).
Brett Zamir
CC BY-SA 3.0
2015-02-04T20:25:02.960Z
Very fascinating, thank you. Still collecting answers, but that is most interesting and relevant (even though that situation involved, on the one hand, increased immigration along with the expanded linguistic access, though on the other hand, would not have been as impactful on language access as would be a whole country gaining access to a new language).
Brett Zamir
CC BY-SA 3.0
2015-02-04T19:17:05.260Z
2015-02-05T01:20:26.690Z
2015-02-05T01:20:26.690Z
BKay
<p>Although I'm specifically interested in the likely economic consequences of implementation of an official world auxiliary language, since this is only theoretical, I'd like to know what have been some economic consequences, whether positive or negative, for those nations that endorsed a lingua franca and thereby opened themselves up to segments of the rest of the world (or conversely, I'd be interested in the long-term economic consequences for a country which, perhaps for anti-colonial reasons, rejected a more internationally spoken language in favor of a local one).</p>

<p>For this question, I'm less interested in lingua francas whose effect was primarily domestic. For example, with Modern Hebrew being chosen in Israel, or perhaps Mandarin Chinese in China to a lesser extent, the ability to speak a new official and universally taught common language did not open up the country precipitously to opportunities for communication with other countries.</p>

<p>Note that I'm not asking here about the economic costs of implementing such a language change.</p>

<p>No doubt, and as with free trade, all things being equal, a lingua franca would increase economic opportunities, whether in collaboration possibilities, education opportunities, etc., but, also as with free trade, a lingua franca might precipitously expose a country to competition in certain (intellectual) fields and thereby create resentment within certain industries which in turn led to protectionism. What experiences have been documented on this topic?</p>

<p>(Note: I can't create a "language" tag for this post, due to my being new here, so "free-trade" was the closest tag I could think of.)</p>

<p>(And just for interest's sake, I've asked re: political consequences at <a href="https://politics.stackexchange.com/questions/7732/external-political-consequences-of-a-lingua-franca">https://politics.stackexchange.com/questions/7732/external-political-consequences-of-a-lingua-franca</a> )</p>

CC BY-SA 4.0
2020-05-13T08:49:42.490Z
Before I found this question, I asked [what the costs have been](https://economics.stackexchange.com/questions/18452/how-could-the-economic-cost-of-the-world-not-speaking-the-same-language-be-estim) of not having a lingua franca. Spoiler: tens of billions per year. In other words, we could have enough money to cure world hunger, if we all agreed on using one language.
Dan Dascalescu
<free-trade>
Economic consequences of a lingua franca
Brett Zamir
# Economic consequences of a lingua franca

(Asked by: username_0 on 2015-02-04)

Although I'm specifically interested in the likely economic consequences of implementation of an official world auxiliary language, since this is only theoretical, I'd like to know what have been some economic consequences, whether positive or negative, for those nations that endorsed a lingua franca and thereby opened themselves up to segments of the rest of the world (or conversely, I'd be interested in the long-term economic consequences for a country which, perhaps for anti-colonial reasons, rejected a more internationally spoken language in favor of a local one).

For this question, I'm less interested in lingua francas whose effect was primarily domestic. For example, with Modern Hebrew being chosen in Israel, or perhaps Mandarin Chinese in China to a lesser extent, the ability to speak a new official and universally taught common language did not open up the country precipitously to opportunities for communication with other countries.

Note that I'm not asking here about the economic costs of implementing such a language change.

No doubt, and as with free trade, all things being equal, a lingua franca would increase economic opportunities, whether in collaboration possibilities, education opportunities, etc., but, also as with free trade, a lingua franca might precipitously expose a country to competition in certain (intellectual) fields and thereby create resentment within certain industries which in turn led to protectionism. What experiences have been documented on this topic?

(Note: I can't create a "language" tag for this post, due to my being new here, so "free-trade" was the closest tag I could think of.)

(And just for interest's sake, I've asked re: political consequences at <https://politics.stackexchange.com/questions/7732/external-political-consequences-of-a-lingua-franca> )

**Tags:** free-trade
> **Comments:**
> **username_1**: Before I found this question, I asked [what the costs have been](https://economics.stackexchange.com/questions/18452/how-could-the-economic-cost-of-the-world-not-speaking-the-same-language-be-estim) of not having a lingua franca. Spoiler: tens of billions per year. In other words, we could have enough money to cure world hunger, if we all agreed on using one language.  

---

## 3 answers

### Answer by username_4 on 2015-02-04. Score: 5 | Accepted answer

These two papers seem relevant. The large Indian wage premium for English language fluency suggests that there would be significant returns at the margin to providing services through trade instead of locally, but they are limited by the supply of foreigners with the right language skills. However, these premiums are largest among the skilled workers, suggesting that the benefits of a universal language would also accrue disproportionately (in absolute wage premia) to the most skilled.

> Recent studies have shown that trade liberalization increases skilled
> wage premiums in developing countries. This result suggests
> globalization may benefit elite skilled workers relatively more than
> poor unskilled workers, increasing inequality. This effect may be
> mitigated, however, if human capital investment responds to new global
> opportunities. A key question is whether a country with a more
> elastic human capital supply is better positioned to benefit from
> globalization. I study how the impact of globalization varies across
> Indian districts with different costs of skill acquisition. **I focus on
> the cost of learning English, a relevant qualification for high-skilled
> export jobs. Linguistic diversity in India compels individuals to
> learn either English or Hindi as a lingua franca.** Some districts have
> lower relative costs of learning English due to linguistic
> predispositions and psychic costs associated with past nationalistic
> pressure to adopt Hindi. I demonstrate that **districts with a more
> elastic supply of English skills benefited more from globalization:
> they experienced greater growth in both information technology jobs
> and school enrollment.** Consistent with this human capital response,
> they experienced smaller increases in skilled wage premiums.

[Human Capital Response to Globalization: Education and Information Technology in India](http://www.cgdev.org/doc/events/1.18.08/shastry_ITandEducation_0108.pdf)

> India's colonial legacy and linguistic diversity give English an
> important role in its economy, and this role has expanded due to
> globalization in recent decades. It is widely believed that there are
> sizable economic returns to English-language skills in India, but the
> extent of these returns is unknown due to lack of a microdata set
> containing measures of both earnings and English ability. In this
> paper, we use a newly available data set - the India Human Development
> Survey, 2005 to quantify the effects of English-speaking ability on
> wages. **We find that being fluent in English (compared to not
> speaking any English) increases hourly wages of men by 34%, which is
> as much as the return to completing secondary school and half as much
> as the return to completing a Bachelor's degree. Being able to speak a
> little English significantly increases male hourly wages 13%. There is
> considerable heterogeneity in returns to English. More experienced and
> more educated workers receive higher returns to English.** The
> complementarity between English skills and education appears to have
> strengthened over time. Only the more educated among young workers
> earn a premium for English skill, whereas older workers across all
> education groups do.

[The Returns to English-Language Skills in India](http://w.cream-migration.org/publ_uploads/CDP_02_10.pdf)

Here is a natural experiment that provides an example of the negative effect of the opening of labor markets on the existing population the new workers will compete with (in this case, the arrival of Russian mathematicians on Western mathematicians' wages and job prospects).

> The fall of the Iron Curtain in late 1991 ended nearly 70 years of
> isolation of Soviet mathematicians from the world mathematical
> community. Suddenly free to travel and emigrate, approximately 1000
> Soviet mathematicians, mostly highly productive researchers, relocated
> to other countries. Three-hundred-thirty-six scientists came to the
> United States.
>
> During the decades of scant contact with foreign colleagues, Russian
> mathematicians, for political reasons that Borjas and Doran explain,
> concentrated on certain fields that tended to get much less attention
> in the West. American mathematicians, meanwhile, had moved ahead in
> areas that Russians largely ignored. When the émigrés arrived in
> America, therefore, they had a great impact on certain mathematical
> fields but much less on others.
>
> These differential impacts allow Borjas and Doran to compare what
> happened in fields heavily and lightly affected by the influx and to
> analyze what a large infusion of new talent and ideas does to a field
> of research. Combining information from several large databases, they
> track the productivity and affiliations of the Russian and American
> mathematicians. Their inquiry concentrates on two major effects; the
> “knowledge shock” from all of the new approaches and insights suddenly
> available to American mathematics, and the “labor market shock” from
> all the new people suddenly on the American mathematics job market.
>
> What they found does not support what Borjas calls the conventional
> “rubbing-off” theory, which holds that if “we get all these highly
> skilled immigrants, … somehow there’s a rubbing-off effect that makes
> you and me more innovative.”
>
> Since the fields with heavy Russian influence had “incredibly bright
> new mathematicians coming in, with all these new theorems, all these
> new techniques flooding the market, you would expect that people
> working in those areas are going to learn quite a lot from them,”
> Borjas says. “At the same time, the number of academic jobs where
> mathematical research is actually done is really not increasing all
> that much. So something has to give.”
>
> That something, the study found, was the career prospects and
> productivity of many of the mathematicians already here. “When you
> increase the number of very smart people in a field by a substantial
> amount,” Borjas says, “… not everybody benefits. The typical
> pre-existing American mathematician actually lost out.”
>
> **That’s because “a generation of American mathematicians at the very
> peak of their mathematical efficiency by luck just happened to
> graduate at the same time these Russians [were] coming in,” Borjas
> explains. The people of that young generation lost the most. Faculty
> members protected by tenure kept their jobs, but mathematicians who
> had not yet attained it found themselves facing sharply heightened
> competition, which produced an “unprecedented 12 percent unemployment
> rate for new American mathematics PhDs” and “a dramatic decrease in
> the probability of obtaining a position in research universities,” the
> article says. The overall unemployment rate for college graduates,
> meanwhile, was dropping rapidly, from 3.2% to 2.2% between 1992 and
> 1996. Many of the young mathematicians in heavily affected fields ended up moving to lower-ranking institutions or leaving academic
> mathematics altogether.**
>
> The situation “drove a lot of American mathematicians into Wall
> Street,” Borjas says. There, in their new role as “quants”
> (quantitative analysts), they turned their talents to inventing
> intricate financial instruments. Ironically, one of Borjas’s
> colleagues has joked, the migration from the formerly communist
> country probably helped to fuel the 2008 economic crisis that nearly
> [> brought down American capitalism.
> Taken for Granted: Foreign Invasion](http://sciencecareers.sciencemag.org/career_magazine/previous_issues/articles/2012_03_02/caredit.a1200024)

> **Comments:**
> **username_0**: +1 as these are good finds and of interest, and I think you are probably right about the disproportionate benefit to skilled workers, but I'm also looking for info on how a lingua franca may provide a relative disadvantage, e.g., if introducing English overwhelmed say the domestic film industry because of competition from more readily understood films coming from outside (e.g., Hollywood).  
> **username_0**: Very fascinating, thank you. Still collecting answers, but that is most interesting and relevant (even though that situation involved, on the one hand, increased immigration along with the expanded linguistic access, though on the other hand, would not have been as impactful on language access as would be a whole country gaining access to a new language).  

---

### Answer by username_2 on 2015-02-04. Score: 4

**Within Currency Areas**

This is not going to be exactly what you're asking for, which also goes into the realms of trade, but:

The use of common language is extremely important. Many Economists consider the lack of common language to be one of the main reasons of the failure of the Euro zone.

**[Optimum Currency Area](http://en.wikipedia.org/wiki/Optimum_currency_area)** theory says that even if the regions are not exactly the same, flows of workers across the regions will equalize returns and lead to convergence within the currency area. The lack of flows within the EURO area was mostly blamed on language barriers. Consequently, the tensions within the area increased and made optimal monetary policy for the union as a whole a pretty difficult task.


---

### Answer by username_3 on 2015-05-10. Score: 0

I understand the economic evidence towards language unification is probably very positive.

But I would note it may have some negative effects on research and development. Establishing a single language lowers the diversity of human language possibly playing a role in learning and technological growth. It may also lower the value of some types of language-important leisure time.

Outside of our field, beliefs about this particular subject are rather strong.

<http://www.scientificamerican.com/article/does-language-shape-what/>

> **Comments:**
> **username_0**: Adopting an international *auxiliary* language wouldn't *necessarily* lead to fewer languages (though that may be the trend regardless). Indeed, one might be more freed up to learn a language of choice when not preoccupied with learning multiple lingua francas.  
> **username_0**: I'm not sure your point in citing the language article, but the at least extreme view of the Sapir-Whorf hypothesis (i.e., of language determining thought) is rejected by linguists. That is interesting about it having a mnemonic effect, but a different language doesn't fundamentally change our thought, so we need not fear that the choice of an international auxiliary language would do so either.  
> **username_0**: As far as loss of diversity to posterity, I think linguists have pretty much documented all living languages, and we can't compel people to keep their languages (though we are not proposing compelling anyone to abandon them either--merely to decide on a single common extra language). As far as learning or technological growth, I can only see that the need to employ people for translation (assuming one even becomes aware of a subject for learning (or a technological opportunity) given a lack of means of communication) in either case is majorly burdensome.  
> **username_3**: Sure, but if language choice has even moderate effects on cognitive function, there could be some contrived circumstance in which a common language impairs the development of .... some technology, like an efficient coding language, or leisure product (like a poem, perhaps?).  I think this would be rare, but cultural change is hardly as cut and dry as we economists would like to think.  
> **username_0**: Very good point though I think it is more an advantage of linguistic diversity rather than a disadvantage of a common language. In the absence of a common lingua franca, it is less likely that any such innovations grounded in linguistic diversity will get discovered since not every good idea bubbles up solely based on its merits.  
> **username_0**: Just came across this article, for example, which shows how preoccupied students are in Zimbabwe in learning different languages, while apparently lacking resources to focus on their own languages: http://www.ibtimes.com/zimbabwe-proposes-compulsory-chinese-lessons-stirring-controversy-1929317  

---

