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Cultural Diversity and Economic Performance: Evidence from European Regions

  • Giovanni Prarolo

    (Università di Bologna)

  • Elena Bellini

    (FEEM)

  • Gianmarco I.P. Ottaviano

    (University of Bologna, FEEM and CEPR)

  • Dino Pinelli

    (FEEM)

We investigate the relationship between diversity and productivity in Europe using an original dataset covering the NUTS 3 regions of 12 countries of the EU15 (Austria, Belgium, Denmark, France, former Western Germany, Ireland, Italy, the Netherlands, Portugal, Spain, Sweden and the United Kingdom). In so doing, we follow the empirical methodology developed by Ottaviano and Peri (2006a) in the case of US cities. The main idea is that, as cultural diversity may affect both production and consumption through positive or negative externalities, the joint estimation of price and income equations is needed to identify the dominant effect. Based on this methodology, we find that diversity is positively correlated with productivity. Moreover, we find evidence that causation runs from the former to the latter. These results for EU regions are broadly consistent with those found by Ottaviano and Peri for US cities.

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Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2009.63.

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Date of creation: Aug 2009
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Handle: RePEc:fem:femwpa:2009.63
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