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

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Abstract

This paper employs industry-level U.S. Census data from 1980-2000 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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File URL: http://commons.colgate.edu/cgi/viewcontent.cgi?article=1001&context=econ_facschol
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Bibliographic Info

Paper provided by Department of Economics, Colgate University in its series Working Papers with number 2007-02.

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Date of creation: Nov 2007
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Handle: RePEc:cgt:wpaper:2007-02

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Keywords: Racial Diversity; Productivity;

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  4. Sparber, Chad, 2007. "Racial Diversity and Macroeconomic Productivity across US States and Cities," Working Papers 2007-01, Department of Economics, Colgate University.
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Cited by:
  1. Parrotta, Pierpaolo & Pozzoli, Dario & Pytlikova, Mariola, 2012. "Does Labor Diversity Affect Firm Productivity?," IZA Discussion Papers 6973, Institute for the Study of Labor (IZA).
  2. 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).
  3. Peri, Giovanni & Sparber, Chad, 2008. "Task Specialization, Immigration, and Wages," Working Papers 09-1, University of California at Davis, Department of Economics.
  4. Peri, Giovanni & Sparber, Chad, 2010. "Highly-Educated Immigrants and Native Occupational Choice," Working Papers 2010-09, Department of Economics, Colgate University.
  5. Ryusuke Ihara, 2011. "Agglomeration with the pros and cons of labor heterogeneity," ERSA conference papers ersa11p528, European Regional Science Association.

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