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Abstract

We analyze the 2007 European financial crisis' impact on the demand for new language skills. The crisis affected German-speaking regions less. Learning German became relatively more attractive for migration and trade. We construct a sub-national database for German as a foreign language exam (TestDaF) participation rates between 2001–2013 and define regional crisis indicators. Using a multiple-group, multiple-period difference-in-differences framework with propensity score matching, we find that TestDaF participation increased significantly in crisis-affected regions, driven by youth and severely-affected Hellenic and Latin linguistic regions.

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