Economic consequences of a lingua franca

Question

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 )

Answer 1

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

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

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

Answer 2

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 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 3

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/