IDEAS home Printed from https://ideas.repec.org/p/cgt/wpaper/2007-01.html
   My bibliography  Save this paper

Racial Diversity and Macroeconomic Productivity across US States and Cities

Author

Abstract

The United States is growing increasingly diverse, so it is important that economists understand the macroeconomic consequences of diversity within the US economy. International analyses often argue that heterogeneity reduces macroeconomic productivity by engendering corruption, political instability, and social turmoil. However, other studies claim that diversity improves creative decision making and augments productivity. This paper exploits differences in diversity across regions of the United States from 1980 to 2000 to determine whether racial heterogeneity creates macroeconomic gains or losses for states and cities. Fixed effects analysis indicates that diversity enhances the productivity of cities. Evidence at the state-level is more ambiguous, as significant results only appear in random effects specifications.

Suggested Citation

  • Sparber, Chad, 2007. "Racial Diversity and Macroeconomic Productivity across US States and Cities," Working Papers 2007-01, Department of Economics, Colgate University.
  • Handle: RePEc:cgt:wpaper:2007-01
    as

    Download full text from publisher

    File URL: http://commons.colgate.edu/cgi/viewcontent.cgi?article=1000&context=econ_facschol
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Vives, Xavier, 2004. "Innovation and Competitive Pressure," CEPR Discussion Papers 4369, C.E.P.R. Discussion Papers.
    2. Gene M. Grossman & Elhanan Helpman, 1991. "Quality Ladders in the Theory of Growth," Review of Economic Studies, Oxford University Press, vol. 58(1), pages 43-61.
    3. Stephen Redding, 2002. "Path Dependence, Endogenous Innovation, and Growth," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 1215-1248, November.
    4. Young, Alwyn, 1993. "Invention and Bounded Learning by Doing," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 443-472, June.
    5. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, pages 323-351.
    6. Jan Boone, 2000. "Competitive Pressure: The Effects on Investments in Product and Process Innovation," RAND Journal of Economics, The RAND Corporation, pages 549-569.
    7. Nickell, Stephen J, 1996. "Competition and Corporate Performance," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 724-746, August.
    8. Ted O'Donoghue, 1998. "A Patentability Requirement for Sequential Innovation," RAND Journal of Economics, The RAND Corporation, pages 654-679.
    9. Simon Kuznets, 1962. "Inventive Activity: Problems of Definition and Measurement," NBER Chapters,in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 19-52 National Bureau of Economic Research, Inc.
    10. Howard F. Chang, 1995. "Patent Scope, Antitrust Policy, and Cumulative Innovation," RAND Journal of Economics, The RAND Corporation, pages 34-57.
    11. Spence, Michael, 1984. "Cost Reduction, Competition, and Industry Performance," Econometrica, Econometric Society, vol. 52(1), pages 101-121, January.
    12. Reinganum, Jennifer F., 1989. "The timing of innovation: Research, development, and diffusion," Handbook of Industrial Organization,in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 14, pages 849-908 Elsevier.
    13. Geroski, P A, 1990. "Innovation, Technological Opportunity, and Market Structure," Oxford Economic Papers, Oxford University Press, vol. 42(3), pages 586-602, July.
    14. Dosi, Giovanni, 1988. "Sources, Procedures, and Microeconomic Effects of Innovation," Journal of Economic Literature, American Economic Association, pages 1120-1171.
    15. Jan Boone, 2000. "Competitive Pressure: The Effects on Investments in Product and Process Innovation," RAND Journal of Economics, The RAND Corporation, pages 549-569.
    16. Richard Blundell & Rachel Griffith & John van Reenen, 1999. "Market Share, Market Value and Innovation in a Panel of British Manufacturing Firms," Review of Economic Studies, Oxford University Press, vol. 66(3), pages 529-554.
    17. Dasgupta, Partha & Stiglitz, Joseph, 1980. "Industrial Structure and the Nature of Innovative Activity," Economic Journal, Royal Economic Society, vol. 90(358), pages 266-293, June.
    18. Aghion, Philippe & Howitt, Peter, 1996. "Research and Development in the Growth Process," Journal of Economic Growth, Springer, vol. 1(1), pages 49-73, March.
    19. Tandon, Pankaj, 1984. "Innovation, Market Structure, and Welfare," American Economic Review, American Economic Association, pages 394-403.
    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


    Cited by:

    1. Gianluca Orefice, 2010. "Skilled Migration and Economic Performances: Evidence from OECD Countries," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), pages 781-820.
    2. Ager, Philipp & Brückner, Markus, 2013. "Cultural diversity and economic growth: Evidence from the US during the age of mass migration," European Economic Review, Elsevier, vol. 64(C), pages 76-97.
    3. 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.
    4. Ratna, Nazmun N. & Quentin Grafton, R. & Kompas, Tom, 2009. "Is diversity bad for economic growth?: Evidence from state-level data in the US," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(6), pages 859-870, December.
    5. Trax, Michaela & Brunow, Stephan & Suedekum, Jens, 2015. "Cultural diversity and plant-level productivity," Regional Science and Urban Economics, Elsevier, vol. 53(C), pages 85-96.
    6. repec:eee:respol:v:46:y:2017:i:6:p:1175-1185 is not listed on IDEAS
    7. Nathan, Max, 2011. "The long term impacts of migration in British cities: diversity, wages, employment and prices," LSE Research Online Documents on Economics 33577, London School of Economics and Political Science, LSE Library.
    8. Philipp Kolo, 2016. "A dissimilarity-adjusted index of ethnic diversity: Measurement and implications for findings on conflict, growth and trade," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 195, Courant Research Centre PEG.
    9. José Garcia Montalvo & Marta Reynal-Querol, 2017. "Ethnic diversity and growth: revisiting the evidence," Economics Working Papers 1585, Department of Economics and Business, Universitat Pompeu Fabra.
    10. Giovanni Peri & Kevin Shih & Chad Sparber, 2016. "STEM Workers, H-1B Visas, and Productivity in US Cities," World Scientific Book Chapters,in: The Economics of International Migration, chapter 9, pages 277-307 World Scientific Publishing Co. Pte. Ltd..
    11. Lee, Neil, 2013. "Cultural diversity, cities and innovation: firm effects or city effects?," LSE Research Online Documents on Economics 57874, London School of Economics and Political Science, LSE Library.
    12. Parrotta, Pierpaolo & Pozzoli, Dario & Pytlikova, Mariola, 2014. "Labor diversity and firm productivity," European Economic Review, Elsevier, vol. 66(C), pages 144-179.
    13. Parrotta, Pierpaolo & Pozzoli, Dario & Pytlikova, Mariola, 2010. "Does Labor Diversity Affect Firm Productivity?," Working Papers 10-12, University of Aarhus, Aarhus School of Business, Department of Economics.
    14. Stephan Brunow & Hanna Brenzel, 2012. "The effect of a culturally diverse labour supply on regional income in the EU," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, pages 461-485.
    15. Dirk Dohse & Robert Gold, 2013. "Measuring Cultural Diversity at a Regional Level," WWWforEurope Working Papers series 10, WWWforEurope.

    More about this item

    Keywords

    Racial Diversity; Macroeconomic Productivity;

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cgt:wpaper:2007-01. 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: (Chad Sparber). General contact details of provider: http://edirc.repec.org/data/declgus.html .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.