Advanced Search
MyIDEAS: Login to save this paper or follow this series

Does Labor Diversity Affect Firm Productivity?

Contents:

Author Info

  • Parrotta, Pierpaolo

    ()
    (Maastricht University)

  • Pozzoli, Dario

    ()
    (Copenhagen Business School)

  • Pytlikova, Mariola

    ()
    (VSB Technical University Ostrava)

Abstract

Using a matched employer-employee data-set, we analyze how workforce diversity in terms of cultural background, education and demographic characteristics affects the productivity of firms in Denmark. Implementing a structural estimation of the firms' production function (Ackerberg et al. 2006), we find that labor diversity in education significantly enhances a firm's value added. Conversely, diversity in ethnicity and demographics induces negative effects on firm productivity. Therefore, the negative effects, which are derived from the communication and integration costs associated with a more culturally and demographically diverse workforce, seem to outweigh the positive effects of creativity and knowledge spillovers.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://ftp.iza.org/dp6973.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6973.

as in new window
Length: 31 pages
Date of creation: Oct 2012
Date of revision:
Publication status: published in European Economic Review, Volume 66, February 2014, Pages 144–179.
Handle: RePEc:iza:izadps:dp6973

Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org

Order Information:
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Email:

Related research

Keywords: skill complementarity; communication barriers; total factor productivity; labor diversity;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Richard Blundell & Steve Bond, 1999. "GMM estimation with persistent panel data: an application to production functions," IFS Working Papers, Institute for Fiscal Studies W99/04, Institute for Fiscal Studies.
  2. Jozef Konings & Stijn Vanormelingen, 2009. "The Impact of Training on Productivity and Wages: Firm Level Evidence," LICOS Discussion Papers, LICOS - Centre for Institutions and Economic Performance, KU Leuven 24409, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  3. Giovanni Peri & Gianmarco I.P. Ottaviano, 2006. "Rethinking the Effects of Immigration on Wages," Working Papers, University of California, Davis, Department of Economics 634, University of California, Davis, Department of Economics.
  4. Chiswick, Barry R & Miller, Paul W, 1995. "The Endogeneity between Language and Earnings: International Analyses," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 13(2), pages 246-88, April.
  5. Glaeser, Edward Ludwig & Laibson, David I. & Scheinkman, Jose A. & Soutter, Christine L., 2000. "Measuring Trust," Scholarly Articles 4481497, Harvard University Department of Economics.
  6. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2009. "Cultural Biases in Economic Exchange?," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 124(3), pages 1095-1131, August.
  7. Rosen, Sherwin, 1981. "The Economics of Superstars," American Economic Review, American Economic Association, American Economic Association, vol. 71(5), pages 845-58, December.
  8. Grund, Christian & Westergård-Nielsen, Niels C., 2005. "Age Structure of the Workforce and Firm Performance," IZA Discussion Papers 1816, Institute for the Study of Labor (IZA).
  9. Alicia Adsera & Mariola Pytlikova, 2012. "The role of language in shaping international migration," Norface Discussion Paper Series, Norface Research Programme on Migration, Department of Economics, University College London 2012014, Norface Research Programme on Migration, Department of Economics, University College London.
  10. Lazear, Edward P, 1999. "Globalisation and the Market for Team-Mates," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 109(454), pages C15-40, March.
  11. Berliant, Marcus & Fujita, Masahisa, 2004. "Knowledge Creation as a Square Dance on the Hilbert Cube," IDE Discussion Papers, Institute of Developing Economies, Japan External Trade Organization(JETRO) 14, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  12. Lang, Kevin, 1986. "A Language Theory of Discrimination," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 101(2), pages 363-82, May.
  13. Chad Sparber, 2009. "Racial Diversity and Aggregate Productivity in U.S. Industries: 1980–2000," Southern Economic Journal, Southern Economic Association, vol. 75(3), pages 829–856, January.
  14. Isphording, Ingo E. & Otten, Sebastian, 2014. "Linguistic Barriers in the Destination Language Acquisition of Immigrants," IZA Discussion Papers 8090, Institute for the Study of Labor (IZA).
  15. Damm, Anna Piil, 2006. "Ethnic Enclaves and Immigrant Labour Market Outcomes: Quasi-Experimental Evidence," Working Papers, University of Aarhus, Aarhus School of Business, Department of Economics 06-4, University of Aarhus, Aarhus School of Business, Department of Economics.
  16. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 70(2), pages 317-341, 04.
  17. Giovanni Peri, 2009. "The Effect of Immigration on Productivity: Evidence from US States," NBER Working Papers 15507, National Bureau of Economic Research, Inc.
  18. Pierpaolo Parrotta & Dario Pozzoli & Mariola Pytlikova, 2011. "Does Labor Diversity affect Firm Productivity?," Norface Discussion Paper Series, Norface Research Programme on Migration, Department of Economics, University College London 2011022, Norface Research Programme on Migration, Department of Economics, University College London.
  19. S. Iranzo & F. Schivardi & E. Tosetti, 2006. "Skill dispersion and firm productivity: an analysis with employer-employee matched data," Working Paper CRENoS 200617, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  20. Navon, Guy, 2009. "Human Capital Spillovers in the Workplace: Labor Diversity and Productivity," MPRA Paper 17741, University Library of Munich, Germany.
  21. Chad Sparber, 2010. "Racial Diversity and Macroeconomic Productivity across US States and Cities," Regional Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 44(1), pages 71-85.
  22. Barton H. Hamilton & Jack A. Nickerson & Hideo Owan, 2003. "Team Incentives and Worker Heterogeneity: An Empirical Analysis of the Impact of Teams on Productivity and Participation," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 111(3), pages 465-497, June.
  23. Carole Maignan & Gianmarco Ottaviano & Dino Pinelli & Francesco Rullani, 2003. "Bio-Ecological Diversity vs. Socio-Economic Diversity: A Comparison of Existing Measures," Working Papers, Fondazione Eni Enrico Mattei 2003.13, Fondazione Eni Enrico Mattei.
  24. Luis Garicano & Esteban Rossi-Hansberg, 2006. "Organization and Inequality in a Knowledge Economy," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 121(4), pages 1383-1435, November.
  25. Pedersen, Peder J. & Pytlikova, Mariola & Smith, Nina, 2008. "Selection and network effects--Migration flows into OECD countries 1990-2000," European Economic Review, Elsevier, Elsevier, vol. 52(7), pages 1160-1186, October.
  26. Gianmarco I.P. Ottaviano & Giovanni Peri, 2004. "The Economic Value of Cultural Diversity: Evidence from US Cities," Working Papers, Fondazione Eni Enrico Mattei 2004.34, Fondazione Eni Enrico Mattei.
  27. Ackerberg, Daniel & Caves, Kevin & Frazer, Garth, 2006. "Structural identification of production functions," MPRA Paper 38349, University Library of Munich, Germany.
  28. Hong, Lu & Page, Scott E., 2001. "Problem Solving by Heterogeneous Agents," Journal of Economic Theory, Elsevier, Elsevier, vol. 97(1), pages 123-163, March.
  29. Eriksson, Tor & Pytliková, Mariola & Warzynski, Frederic, 2009. "Increased Sorting and wage Inequality in the Czech Republic: New Evidence Using Linked Employer-Employee Dataset," Working Papers, University of Aarhus, Aarhus School of Business, Department of Economics 09-5, University of Aarhus, Aarhus School of Business, Department of Economics.
  30. Mette Deding & Trine Filges & Jos Van Ommeren, 2009. "Spatial Mobility And Commuting: The Case Of Two-Earner Households," Journal of Regional Science, Wiley Blackwell, Wiley Blackwell, vol. 49(1), pages 113-147.
  31. Alesina, Alberto F & La Ferrara, Eliana, 2000. "Who Trusts Others?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2646, C.E.P.R. Discussion Papers.
  32. Evan Osborne, 2000. "The Deceptively Simple Economics of Workplace Diversity," Journal of Labor Research, Transaction Publishers, Transaction Publishers, vol. 21(3), pages 463-476, July.
  33. Leonard, Jonathan & Levine, David I., 2006. "Diversity, Discrimination, and Performance," Institute for Research on Labor and Employment, Working Paper Series, Institute of Industrial Relations, UC Berkeley qt2p3880ms, Institute of Industrial Relations, UC Berkeley.
  34. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 317-341.
  35. Rauch, J E & Casella, Alessandra, 2001. "Overcoming Informational Barriers to International Resource Allocation: Prices and Ties," University of California at San Diego, Economics Working Paper Series, Department of Economics, UC San Diego qt2k8626fr, Department of Economics, UC San Diego.
  36. Suedekum, Jens & Wolf, Katja & Blien, Uwe, 2009. "Cultural Diversity and Local Labour Markets," IZA Discussion Papers 4619, Institute for the Study of Labor (IZA).
  37. Alesina, Alberto & La Ferrara, Eliana, 2005. "Ethnic Diversity and Economic Performance," Scholarly Articles 4553005, Harvard University Department of Economics.
  38. repec:cdl:indrel:3481 is not listed on IDEAS
  39. Kremer, M & Maskin, E, 1996. "Wage Inequality and Segregation by Skill," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 96-23, Massachusetts Institute of Technology (MIT), Department of Economics.
  40. Pierpaolo Parrotta & Dario Pozzoli, 2012. "The effect of learning by hiring on productivity," RAND Journal of Economics, RAND Corporation, vol. 43(1), pages 167-185, 03.
  41. Wooldridge, Jeffrey M., 2009. "On estimating firm-level production functions using proxy variables to control for unobservables," Economics Letters, Elsevier, Elsevier, vol. 104(3), pages 112-114, September.
  42. Sparber, Chad, 2008. "A theory of racial diversity, segregation, and productivity," Journal of Development Economics, Elsevier, Elsevier, vol. 87(2), pages 210-226, October.
  43. Ackerberg, Daniel & Lanier Benkard, C. & Berry, Steven & Pakes, Ariel, 2007. "Econometric Tools for Analyzing Market Outcomes," Handbook of Econometrics, Elsevier, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 63 Elsevier.
  44. Kaivan Munshi, 2003. "Networks In The Modern Economy: Mexican Migrants In The U.S. Labor Market," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 118(2), pages 549-599, May.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp6973. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.