Language and consumption

•We examine the relationship between Mandarin proficiency and consumption in China.•Mandarin proficiency has a positive effect on total consumption expenditure.•Mandarin proficiency has a positive effect on most categories of consumption.•Mandarin proficiency has a positive effect on relative consumption.

We examine the relationship between proficiency in Mandarin and consumption in China. We find that proficiency in Mandarin has a positive effect on an individual's total consumption expenditure as well as most categories of consumption expenditure. We also find considerable heterogeneity in the effects of Mandarin proficiency on consumption across subsamples. In addition, we find that proficiency in Mandarin has a positive effect on relative consumption, irrespective of the manner in which the reference group is defined. Our results have important policy implications for debates on the promotion of a national language and, in particular, recent debate about the promotion of speaking Mandarin in China.