Is Language an Economic Institution? Evidence from R&D Investment
56 Pages Posted: 13 Oct 2018 Last revised: 22 Jan 2021
Date Written: December 16, 2019
Some languages encode future timing more ambiguously than others. We identify two economic channels through which more ambiguous reference to future timing leads to higher levels of R&D investment. Our empirical tests on country- and firm-level R&D investment confirm this prediction, even after controlling for an extensive set of formal and informal economic institutions and addressing endogeneity concern in multiple ways. Tests on patent generation provide further evidence that ambiguous reference to future timing leads to more innovation.
Keywords: language, R&D, innovation, economic institution, future-time reference
JEL Classification: D02, G30, O30, O32, Z13
Suggested Citation: Suggested Citation