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The economic value of cultural diversity: evidence from US cities

In: The Economics of International Migration

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  • Gianmarco I.P. Ottaviano
  • Giovanni Peri

Abstract

What are the economic consequences to U.S. natives of the growing diversity of American cities? Is their productivity or utility affected by cultural diversity as measured by diversity of countries of birth of U.S. residents? We document in this paper a very robust correlation: US-born citizens living in metropolitan areas where the share of foreign-born increased between 1970 and 1990, experienced a significant increase in their wage and in the rental price of their housing. Such finding is economically significant and survives omitted variable bias and endogeneity bias. As people and firms are mobile across cities in the long run we argue that, in equilibrium, these correlations are consistent with a net positive effect of cultural diversity on the productivity of natives.

Suggested Citation

  • Gianmarco I.P. Ottaviano & Giovanni Peri, 2016. "The economic value of cultural diversity: evidence from US cities," World Scientific Book Chapters, in: The Economics of International Migration, chapter 7, pages 229-264, World Scientific Publishing Co. Pte. Ltd..
  • Handle: RePEc:wsi:wschap:9789814719902_0007
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    More about this item

    Keywords

    Migration; Immigration; Growth; Productivity; Labor Markets; Selection; Immigration Policies;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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