Ethnolinguistic diversity, quality of local public institutions, and firm-level innovation
Open access
Date
2023-09Type
- Journal Article
ETH Bibliography
yes
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Abstract
Institutional quality is crucial for innovation and economic growth. In this article, we exploit historical linguistic differences across Slovenian municipalities between the Italian, German, and Slovenian-speaking population prior to World War 1, as a plausible exogenous source of variation in firm-level innovation to estimate the effect of institutional quality on innovation. Employing a set of limited dependent variable and instrumental variable models, we show that greater historical exposure to multilingualism is associated with markedly better quality of government and provision of public goods, more impartial local government administration, and lower prevalence of corruption, which in turn predicts systematically more vibrant economic activity, greater economic complexity, and higher rates of firm-level innovation at the local level. The estimated effects are robust to a variety of specification checks and do not appear to be sensitive to the choice of ethnic and linguistic diversity measures. Show more
Permanent link
https://doi.org/10.3929/ethz-b-000630740Publication status
publishedExternal links
Journal / series
International Review of Law and EconomicsVolume
Pages / Article No.
Publisher
ElsevierSubject
Corruption; Economic history; Firms; Innovation; Productivity; InstitutionsMore
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ETH Bibliography
yes
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