The effects of common culture and language on economic exchanges: evidence from tourist flows

This paper analyzes the impact of cultural proximity on economic exchanges and, in particular, on tourist flows. It exploits the cultural heterogeneity in South Tyrol, an Italian region bordering on Austria and Switzerland where two main linguistic groups (Italian and German) coexist. It is shown that the share of tourism by German-speaking countries (Germany, Austria and Switzerland) positively correlates with the share of the local population belonging to the German linguistic group. This result is robust to the introduction of a very fine set of geographical dummies (local labour systems) and a number of municipality-level covariates. It also holds when instrumenting the share of the German-speaking local population with the increase of the local population in the period 1921–36 when the forced Italianization of South Tyrol took place under the Fascist regime.