Culture and Language
Forthcoming, Journal of Political Economy
Edward P. Lazear
Hoover Institution and Graduate School of Business Stanford University
This essay is in honor of Gary Becker, who influenced my thinking enormously. During my almost twenty years at Chicago, Gary, as senior colleague and friend, was a source of constant inspiration. I believe that the analysis in this paper is very much in the spirit of Gary’s work. Probably closest to his Economics of Discrimination, the goal is to take an economic framework and use it to explain a phenomenon which would have been viewed as essentially sociological. In this case, the parallels with the his work on discrimination are quite close. Prices drive the model and the question relates to how different ethnic groups interact with one another. I hope that the analysis will bolster the argument, made most convincingly by Gary Becker, that economics is a very powerful discipline that can be used to shed light on almost all aspects of behavior. This work was supported in part by the National Science Foundation. I thank Michael Schwarz for research assistance. The author acknowledges the useful comments of Richard Adelstein, Annelise Anderson, Gary Becker, David Card, Nicolas Economides, Henry Farber, Eugene Fama, Robert Gibbons, Edward Glaeser, Matthew Jackson, Andrew John, Ken Judd, Jacob Mincer, Casey Mulligan, Paul Romer, Sherwin Rosen, George Shultz, Karen Van Nuys, Michael Waldman, Kei-Mu Yi and participants of seminars at Stanford GSB and Hoover, Princeton, the University of Chicago and the University of Rochester.
Abstract Common culture and common language facilitate trade between individuals. Individuals have incentives to learn the other languages and cultures so that they have a larger pool of potential trading partners. The value of assimilation is larger to an individual from a small minority than to one from a large minority group. When a society has a very large...