Dialects, cultural identity, and economic exchange

We study the effect of cultural ties on economic exchange using a novel measure for cultural identity: dialects. 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 similarities that have been evolving for centuries, and provides an ideal opportunity to measure cultural barriers to economic exchange at a fine geographical scale. In a gravity analysis we show that cross-regional migration flows in the period 2000-2006 are positively affected by historical dialect similarity. Using different empirical strategies, we show that this finding indicates highly time-persistent cultural ties that foster economic exchange across regions.