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Immigration and Innovation in European Regions

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  • Ozgen, Ceren

    () (VU University Amsterdam)

  • Nijkamp, Peter

    () (VU University Amsterdam)

  • Poot, Jacques

    () (University of Waikato)

Abstract

The concentration of people with diverse socio-cultural backgrounds in particular geographic areas may boost the creation of new ideas, knowledge spillovers, entrepreneurship, and economic growth. In this paper we measure the impact of the size, skills, and diversity of immigration on the innovativeness of host regions. For this purpose we construct a panel of data on 170 regions in Europe (NUTS 2 level) for the periods 1991-1995 and 2001-2005. Innovation outcomes are measured by means of the number of patent applications per million inhabitants. Given the geographical concentration and subsequent diffusion of innovation activity, and the spatial selectivity of immigrants' location choices, we take account of spatial dependence and of the endogeneity of immigrant settlement in our econometric modelling. We use the location of McDonald's restaurants as a novel instrument for immigration. The results confirm that innovation is clearly a function of regional accessibility, industrial structure, human capital, and GDP growth. In addition, patent applications are positively affected by the diversity of the immigrant community beyond a critical minimum level. An increase in the fractionalization index by 0.1 from the regional mean of 0.5 increases patent applications per million inhabitants by about 0.2 percent. Moreover, the average skill level of immigrants (proxied by global regions of origin) also affects patent applications. In contrast, an increasing share of foreigners in the population does not conclusively impact on patent applications. Therefore, a distinct composition of immigrants from different backgrounds is a more important driving force for innovation than the sheer size of the immigrant population in a certain locality.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5676.

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Length: 33 pages
Date of creation: Apr 2011
Date of revision:
Handle: RePEc:iza:izadps:dp5676

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Related research

Keywords: innovation; economic growth; cultural diversity; immigration; spatial autocorrelation;

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References

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  1. Maré, David C. & Fabling, Richard & Stillman, Steven, 2011. "Immigration and Innovation," IZA Discussion Papers 5686, Institute for the Study of Labor (IZA).
  2. Sari Pekkala Kerr & William R. Kerr, 2011. "Economic Impacts of Immigration: A Survey," NBER Working Papers 16736, National Bureau of Economic Research, Inc.
  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.
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Citations

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Cited by:
  1. Stephan Brunow & Peter Nijkamp, 2012. "The impact of a culturally diverse workforce on firms’ market size: An empirical investigation on Germany," Norface Discussion Paper Series 2012022, Norface Research Programme on Migration, Department of Economics, University College London.
  2. Andrés Rodríguez-Pose & Tobias D. Ketterer, 2012. "Do local amenities affect the appeal of regions in Europe for migrants?," Working Papers 2012-04, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
  3. 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.
  4. Sander Hoogendoorn & Mirjam van Praag, 2012. "Ethnic Diversity and Team Performance: A Field Experiment," Tinbergen Institute Discussion Papers 12-068/3, Tinbergen Institute.
  5. Annie Tubadji & Peter Nijkamp, 2012. "Altruism to Strangers for our Own Sake: Domestic Effects from Immigration," Tinbergen Institute Discussion Papers 12-079/3, Tinbergen Institute.
  6. Hoogendoorn, Sander M. & van Praag, Mirjam, 2012. "Ethnic Diversity and Team Performance: A Field Experiment," IZA Discussion Papers 6731, Institute for the Study of Labor (IZA).
  7. 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).
  8. Rob Hodgson & Jacques Poot, 2011. "New Zealand Research on the Economic Impacts of Immigration 2005-2010: Synthesis and Research Agenda," CReAM Discussion Paper Series 1104, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.

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