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Cultural Diversity and Local Labour Markets

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Author Info

  • Suedekum, Jens

    ()
    (Heinrich Heine University Düsseldorf)

  • Wolf, Katja

    ()
    (Institute for Employment Research (IAB), Nuremberg)

  • Blien, Uwe

    ()
    (Institute for Employment Research (IAB), Nuremberg)

Abstract

During the last decade there have been marked changes in the composition of the non-native workforce in the German labour market. In particular there has been a notable increase in the diversity of nationalities of which the foreign workforce is composed. In this paper we investigate the effects of this diversity for native employees. Our analysis is conducted at the local level and uses a panel of 326 Western German regions over the time period 1995-2006. When considering high-skilled foreign workers, we find that both the size of this group and the diversification into different nationalities raise local wages and employment for native employees. For low-skilled foreign workers we find negative size effects. However, these negative effects can be partly offset if the group of low-skilled foreigners is culturally diversified. Our results imply that diversity raises productivity at the local level, but that it is important to distinguish the skill composition of the foreign workforce. These findings remain robust in a variety of robustness checks that take into account omitted variable bias, self-selection of foreigners into particular regions, and spatial autocorrelation.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4619.

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Length: 35 pages
Date of creation: Dec 2009
Date of revision:
Publication status: published in: Regional Studies, 2014, 48 (1), 173-191
Handle: RePEc:iza:izadps:dp4619

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Keywords: immigration; cultural diversity; regional labour markets; spatial equilibrium;

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Cited by:
  1. Parrotta, Pierpaolo & Pozzoli, Dario & Pytlikova, Mariola, 2010. "Does Labor Diversity Affect Firm Productivity?," Working Papers 10-12, University of Aarhus, Aarhus School of Business, Department of Economics.
  2. Ceren Ozgen, 2011. "The Impact of Cultural Diversity on Innovation: Evidence from Dutch Firm-Level Data," Norface Discussion Paper Series 2011013, Norface Research Programme on Migration, Department of Economics, University College London.
  3. de Graaff, Thomas & Nijkamp, Peter, 2010. "Socio-economic impacts of migrant clustering on Dutch neighbourhoods: In search of optimal migrant diversity," Socio-Economic Planning Sciences, Elsevier, vol. 44(4), pages 231-239, December.
  4. Peter Nijkamp, 2012. "Migration Impact Assessment: A Review of Evidence-Based Findings," Review of Economic Analysis, Rimini Centre for Economic Analysis, vol. 4(2), pages 179-208, December.
  5. Lucht, Michael & Haas, Anette, 2012. "Heterogeneous Firms and Substitution by Tasks: the Productivity Effect of Migrants," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 62053, Verein für Socialpolitik / German Economic Association.
  6. Ceren Ozgen & Peter Nijkamp & Jacques Poot, 2013. "Measuring Cultural Diversity and its Impact on Innovation: Longitudinal Evidence from Dutch firms," Norface Discussion Paper Series 2013003, Norface Research Programme on Migration, Department of Economics, University College London.
  7. Max Nathan, 2011. "The Long Term Impacts of Migration in British Cities: Diversity, Wages, Employment and Prices," SERC Discussion Papers 0067, Spatial Economics Research Centre, LSE.
  8. Anette Haas & Michael Lucht & Norbert Schanne, 2012. "Why to employ both migrants and natives? A study on task-specific substitutability," Norface Discussion Paper Series 2012026, Norface Research Programme on Migration, Department of Economics, University College London.
  9. Ozgen, Ceren & Nijkamp, Peter & Poot, Jacques, 2011. "Immigration and Innovation in European Regions," IZA Discussion Papers 5676, Institute for the Study of Labor (IZA).
  10. Ozgen, Ceren & Nijkamp, Peter & Poot, Jacques, 2011. "The Impact of Cultural Diversity on Innovation: Evidence from Dutch Firm-Level Data," IZA Discussion Papers 6000, Institute for the Study of Labor (IZA).
  11. Longhi, Simonetta, 2011. "Impact of cultural diversity on wages and job satisfaction in England," ISER Working Paper Series 2011-19, Institute for Social and Economic Research.
  12. Dirk Dohse & Robert Gold, 2013. "Measuring Cultural Diversity at a Regional Level," WWWforEurope Working Papers series 10, WWWforEurope.
  13. Parrotta, Pierpaolo & Pozzoli, Dario & Pytlikova, Mariola, 2014. "Labor diversity and firm productivity," European Economic Review, Elsevier, vol. 66(C), pages 144-179.
  14. Thomas Kemeny, 2013. "Immigrant Diversity and Economic Development in Cities: A Critical Review," SERC Discussion Papers 0149, Spatial Economics Research Centre, LSE.

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