Immigrant Heterogeneity and Urban Development: A Conceptual Analysis

In this chapter we examine the contribution of immigrant heterogeneity to the attractiveness of cities from both the production and the consumption side. Based on an extensive literature review, we hypothesize that the interaction of people from different cultural groups in cities will increase labour productivity in line with the concepts of Jacobs externalities. For the consumption side of the model – a far less researched issue – we hypothesize that urban cultural diversity increases the heterogeneity in the private goods provided, which will increase the utility of living in that area. We argue that future research should focus on the interaction of people from different cultures in the workplace in order to determine urban productivity externalities, and on immigrant-induced product heterogeneity in a city in order to determine immigrant-induced urban amenities. To answer these questions, the use of micro datasets is inevitable.