Language Policy and Economic Development

We explore the role of language policy choices as a source of growth and development of nation states. First in a cross-country framework we document that choosing as official a language that is distant from the ones spoken by the local population is negatively correlated with the level of income per capita. This effect is economically meaningful and robust to a wide variety of controls such as institutional quality, geography, ethno-linguistic fractionalization and natural resources. To help interpret the cross-country results, we identify theoretically two channels: (a) the individual’s exposure to and (b) the individual’s mother tongue’s distance from the official language. Next, using individual level data from a set of twelve African countries and India, we provide empirical support on how these two channels affect human capital and occupational outcomes. Finally, we present narrative evidence on why, given the welfare implications of language policy, post-colonial elites have sustained inefficient policies. The theoretical and empirical evidence presented suggest the need for further exploration of the role of language in economic development. JEL: I24, I25, I28, Z18.