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Effects of cultural diversity on individual establishments

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Author Info

  • Stephan Brunow

    ()
    (Institute for Employment Research)

  • Uwe Blien

    ()
    (Institute for Employment Research)

Abstract

International immigration affects the degree of cultural diversity present in a labour force. This paper focuses on the consequences of immigration with respect to the level of cultural diversity by estimating employment functions for individual establishments. The theory behind the empirical analyses is based on a "turned around" New Economic Geography model. The data basis used is a linked employer - employee data set generated by a fusion of the IAB Establishment Panel with the Employment Statistics of Germany, which provides very detailed information about individual workers and establishments. In the empirical analyses it is shown that employment is lower when the degree of diversity is higher, regarding the revenue of an individual establishment as given. From this result it can be derived under the conditions of monopolistic competition (implying elastic product demand) that the establishment is able to occupy a relatively large part of the market. Finally this implies relatively high labour demand.

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Bibliographic Info

Paper provided by Norface Research Programme on Migration, Department of Economics, University College London in its series Norface Discussion Paper Series with number 2011006.

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Date of creation: Apr 2011
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Handle: RePEc:nor:wpaper:2011006

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Keywords: effects of immigration; cultural diversity; employment; productivity; firm level;

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Cited by:
  1. Stephan Brunow & Hanna Brenzel, 2012. "The effect of a culturally diverse labour supply on regional income in the EU," Empirica, Springer, vol. 39(4), pages 461-485, November.
  2. Stephan Brunow & Bastian Stockinger, 2013. "Establishments' and Regions' Cultural Diversity as a Source of Innovation: Evidence from Germany," Norface Discussion Paper Series 2013022, Norface Research Programme on Migration, Department of Economics, University College London.
  3. Ceren Ozgen & Thomas de Graff, 2013. "Sorting out the impact of cultural diversity on innovative firms. An empirical analysis of Dutch micro-data," Norface Discussion Paper Series 2013012, Norface Research Programme on Migration, Department of Economics, University College London.
  4. Stephan Brunow & Peter Nijkamp, 2012. "The Impact of a Culturally Diverse Workforce on Firms' Market Size: An Empirical Investigation on Germany," Tinbergen Institute Discussion Papers 12-082/3, Tinbergen Institute.
  5. Dirk Dohse & Robert Gold, 2013. "Measuring Cultural Diversity at a Regional Level," WWWforEurope Working Papers series 10, WWWforEurope.
  6. Max Nathan, 2014. "The wider economic impacts of high-skilled migrants: a survey of the literature for receiving countries," IZA Journal of Migration, Springer, vol. 3(1), pages 1-20, December.

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