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The ‘Paradox of Diversity’: Economic Evidence from US Cities 1980–2010

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  • Nazmun Ratna, R. Quentin Grafton, Hang To

Abstract

We evaluate the economic significance of linguistic barriers to communication in 226 US cities from 1980 to 2010. We address the question: to what extent do linguistic barriers across social groups inhibit the benefits of knowledge exchange? The empirical results show that linguistic, racial and composite diversity increase the average income of working age population in American cities. This positive effect of diversity, however, diminishes the higher is the proportion of foreign-born population who lack English fluency. We call this the ‘paradox of diversity’. Overall, our findings provide important policy insights about how social diversity may enhance economic performance within cities.

Suggested Citation

  • Nazmun Ratna, R. Quentin Grafton, Hang To, 2017. "The ‘Paradox of Diversity’: Economic Evidence from US Cities 1980–2010," Asia and the Pacific Policy Studies 201702, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:appswp:201702
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    Keywords

    diversity; economic performance; wages; cities; immigrants;
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