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Cultural diversity, institutions, and urban economic performance

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  • Thomas Kemeny

Abstract

Interactions between culturally diverse individuals can spur economic benefits by stimulating new ideas that raise urban residents’ productivity. But diversity can also diminish economic well-being by making communication difficult, and by stimulating conflict. This paper investigates whether urban institutions—in particular residents’ sense of generalized trust—determine when diversity is an economic asset and when it is a liability. To do so, data on trust, birthplace diversity, wages, and demographics in US metropolitan areas are combined. The evidence suggests that workers are much better able to harness the productivity-enhancing spillovers that arise from cultural diversity when they live in cities endowed with strong informal institutions. Keywords: urban economic development, cultural diversity, generalized trust, social capital, immigration

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Bibliographic Info

Article provided by Pion Ltd, London in its journal Environment and Planning A.

Volume (Year): 44 (2012)
Issue (Month): 9 (September)
Pages: 2134-2152

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Handle: RePEc:pio:envira:v:44:y:2012:i:9:p:2134-2152

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Web page: http://www.pion.co.uk

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Cited by:
  1. Thomas Kemeny, 2013. "Immigrant Diversity and Economic Development in Cities: A Critical Review," SERC Discussion Papers 0149, Spatial Economics Research Centre, LSE.
  2. Neil Lee, 2013. "Cultural Diversity, Cities and Innovation: firm Effects or City Effects?," SERC Discussion Papers 0144, Spatial Economics Research Centre, LSE.

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