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Linguistic Diversity and Workplace Productivity

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  • Dale-Olsen, Harald

    (Institute for Social Research, Oslo)

  • Finseraas, Henning

    (Norwegian University of Science and Technology (NTNU))

Abstract

We study the importance of linguistic diversity in the workplace for workplace productivity. While cultural diversity might improve productivity through new ideas and innovation, linguistic diversity might increase communication costs and thereby reduce productivity. We apply a new measure of languages' linguistic proximity to Norwegian linked employer-employee Manufacturing data from 2003-12, and find that higher workforce linguistic diversity decreases productivity. We find a negative effect also when we take into account the impact of cultural diversity. As expected proficiency in Norwegian of foreign workers improves since their time of arrival in Norway, the detrimental impact disappears.

Suggested Citation

  • Dale-Olsen, Harald & Finseraas, Henning, 2019. "Linguistic Diversity and Workplace Productivity," IZA Discussion Papers 12621, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp12621
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    More about this item

    Keywords

    productivity; diversity; language diversity; GMM;
    All these keywords.

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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