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The effect of a culturally diverse population on regional income in EU regions

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  • Stephan Brunow

    ()
    (Institute for Employment Research, Nuremberg)

  • Hanna Brenzel

    ()
    (Institute for Employment Research, Nuremberg)

Abstract

After the crisis years of 2008 and 2009 EU countries followed different employment pathes. Employment and wage levels, for instance, are quite unevenly distributed across Europe. Some of the member states expect labour shortages due to demographic change in the future. If this is the case, wages will rise when the shortages occur. From literature on migration it is well known that regions with relatively higher income levels and a lower risk of unemployment are typical destination countries for immigration. Thus, European regions might be expected to become rather mixed in cultural terms in the future. Despite the filling of the labour market and the redistribution of the resource of labour, the ultimate question raised in the discussion is whether there are additional gains or losses due to immigration. This work therefore focuses on the impact of migrants on regional GDP per capita for European regions. Does the proportion of foreigners in the labour force increase or lower regional income? Does the composition of non-natives with respect to their countries of origin matter? Both questions are addressed in this study while controlling for endogeneity. We provide evidence that immigration raises regional income and a tendency towards (roughly classified) dominant foreign-born groups reduces the costs of interaction and integration. Thus, in general immigration has a positive effect on regional performance and the costs of immigration in destination regions are balanced out. Depending on the labour market status of migrants, the regions of orgin of migrants within the EU face a rise or decline in income as a result of the outflow.

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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 2011021.

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Date of creation: Dec 2011
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Handle: RePEc:nor:wpaper:2011021

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  1. repec:chb:bcchwp:03 is not listed on IDEAS
  2. Caselli, Francesco & Esquivel, Gerardo & Lefort, Fernando, 1996. " Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics," Journal of Economic Growth, Springer, vol. 1(3), pages 363-89, September.
  3. Alberto Alesina & Eliana La Ferrara, 2004. "Ethnic Diversity and Economic Performance," NBER Working Papers 10313, National Bureau of Economic Research, Inc.
  4. Bellini, Elena & Ottaviano, Gianmarco I. P. & Pinelli, Dino & Prarolo, Giovanni, 2008. "Cultural diversity and economic performance: Evidence from European regions," HWWI Research Papers 3-14, Hamburg Institute of International Economics (HWWI).
  5. Brunow, Stephan & Hirte, Georg, 2005. "Age Structure and Regional Income Growth," Discussion Papers 1/2005, Dresden University of Technology, Faculty of Transportation and Traffic Sciences "Friedrich List", Institute for Transport and Economics.
  6. Paul Collier, 2001. "Implications of ethnic diversity," Economic Policy, CEPR & CES & MSH, vol. 16(32), pages 127-166, 04.
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Cited by:
  1. Dirk Dohse & Robert Gold, 2013. "Measuring Cultural Diversity at a Regional Level," WWWforEurope Working Papers series 10, WWWforEurope.
  2. 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.

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