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Economic Impacts of Cultural Diversity in the Netherlands: Productivity, Utility, and Sorting

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Author Info

  • Jessie Bakens

    (VU University Amsterdam)

  • Peter Mulder

    (VU University Amsterdam)

  • Peter Nijkamp

    (VU University Amsterdam)

Abstract

This paper identifies the role of cultural diversity in explaining spatial disparities in wages and housing prices across Dutch cities, using unique individual panel data of home owners. We distinguish between the effects of interactions-based productivity, consumption amenities and sorting of heterogeneous home owners while controlling for interactions between the labor and housing market. We find that an increase in the cultural diversity of the population positively impacts equilibrium wages and housing prices, particularly in the largest and most densely populated cities. This result is largely driven by spatial sorting of individuals in both the labor and housing market. After controlling for home owner heterogeneity we find that increasing cultural diversity no longer impacts local labor markets and negatively impacts local housing markets. The latter result is likely to be driven by a negative causal effect of increased cultural diversity on neighb orhood quality that outweighs a positive effect of increased cultural diversity in consumption goods.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 12-024/3.

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Date of creation: 19 Mar 2012
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Handle: RePEc:dgr:uvatin:20120024

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Web page: http://www.tinbergen.nl

Related research

Keywords: cultural diversity; immigrants; local amenities; sorting; housing prices; productivity;

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Cited by:
  1. Accetturo, Antonio & Manaresi, Francesco & Mocetti, Sauro & Olivieri, Elisabetta, 2014. "Don't stand so close to me: The urban impact of immigration," Regional Science and Urban Economics, Elsevier, vol. 45(C), pages 45-56.
  2. Longhi, Simonetta, 2013. "Impact of cultural diversity on wages, evidence from panel data," Regional Science and Urban Economics, Elsevier, vol. 43(5), pages 797-807.
  3. Neil Lee, 2013. "Cultural Diversity, Cities and Innovation: firm Effects or City Effects?," SERC Discussion Papers 0144, Spatial Economics Research Centre, LSE.
  4. Thomas Kemeny, 2013. "Immigrant Diversity and Economic Development in Cities: A Critical Review," SERC Discussion Papers 0149, Spatial Economics Research Centre, LSE.
  5. Gianmarco Ottaviano & Giovanni Peri, 2013. "New Frontiers Of Immigration Research: Cities And Firms," Journal of Regional Science, Wiley Blackwell, vol. 53(1), pages 1-7, 02.
  6. Zhiling Wang & Thomas de Graaff & and Peter Nijkamp, 2014. "Cultural Diversity and Cultural Distance as Choice Determinants of Migration Destination," Tinbergen Institute Discussion Papers 14-066/VIII, Tinbergen Institute.
  7. Dr Max Nathan, 2013. "The Wider Economic Impacts Of High-Skilled Migrants: A Survey Of The Literature," NIESR Discussion Papers 11607, National Institute of Economic and Social Research.

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