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Racial Diversity and Aggregate Productivity in U.S. Industries: 1980–2000

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  • Chad Sparber

    ()
    (Department of Economics, Colgate University, 13 Oak Drive, Hamilton, NY 13346, USA)

Abstract

This paper employs industry-level U.S. census data from 1980 to 2000 to assess the aggregate effects of racial diversity. While most international accounts find that diversity reduces productivity, I argue that the U.S. experience is more nuanced. Unqualified statements about the costs and merits of diversity are unwarranted, as racial heterogeneity increases productivity within many, but not all, industries. Sectors employing a large number of workers responsible for creative decision making and customer service experience gains from diversity, while industries characterized by high levels of group effort suffer losses. The results thus reconcile two competing literatures by suggesting that diversity improves decision making and problem solving but also encumbers common action and public goods provision.

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Bibliographic Info

Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 75 (2009)
Issue (Month): 3 (January)
Pages: 829–856

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Handle: RePEc:sej:ancoec:v:75:3:y:2009:p:829-856

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Cited by:
  1. Thomas Kemeny, 2013. "Immigrant Diversity and Economic Development in Cities: A Critical Review," SERC Discussion Papers, Spatial Economics Research Centre, LSE 0149, Spatial Economics Research Centre, LSE.
  2. Ryusuke Ihara, 2011. "Agglomeration with the pros and cons of labor heterogeneity," ERSA conference papers ersa11p528, European Regional Science Association.
  3. Pierpaolo Parrotta & Dario Pozzoli & Mariola Pytlikova, 2011. "Does Labor Diversity affect Firm Productivity?," Norface Discussion Paper Series, Norface Research Programme on Migration, Department of Economics, University College London 2011022, Norface Research Programme on Migration, Department of Economics, University College London.
  4. Ager, Philipp & Brückner, Markus, 2013. "Cultural diversity and economic growth: Evidence from the US during the age of mass migration," European Economic Review, Elsevier, Elsevier, vol. 64(C), pages 76-97.
  5. Parrotta, Pierpaolo & Pozzoli, Dario & Pytlikova, Mariola, 2014. "Labor diversity and firm productivity," European Economic Review, Elsevier, Elsevier, vol. 66(C), pages 144-179.
  6. Giovanni Peri & Chad Sparber, 2008. "Task Specialisation, Immigration and Wages," Development Working Papers, Centro Studi Luca d\'Agliano, University of Milano 252, Centro Studi Luca d\'Agliano, University of Milano.
  7. Peri, Giovanni & Sparber, Chad, 2010. "Highly-Educated Immigrants and Native Occupational Choice," Working Papers, Department of Economics, Colgate University 2010-09, Department of Economics, Colgate University.
  8. Ryusuke Ihara & Shizu Yamamoto, 2012. "Does labor diversity cause agglomeration in Japan?: an NEG approach with a covariance structure analysis," ERSA conference papers ersa12p430, European Regional Science Association.
  9. Wunnava, Phanindra V. & Mitra, Aniruddha & Prasch, Robert E., 2012. "Globalization, Institutions, and the Ethnic Divide: Recent Longitudinal Evidence," IZA Discussion Papers 6459, Institute for the Study of Labor (IZA).

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