IDEAS home Printed from https://ideas.repec.org/p/fem/femwpa/2009.63.html
   My bibliography  Save this paper

Cultural Diversity and Economic Performance: Evidence from European Regions

Author

Listed:
  • Giovanni Prarolo

    (Università di Bologna)

  • Elena Bellini

    (FEEM)

  • Gianmarco I.P. Ottaviano

    (University of Bologna, FEEM and CEPR)

  • Dino Pinelli

    (FEEM)

Abstract

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.

Suggested Citation

  • Giovanni Prarolo & Elena Bellini & Gianmarco I.P. Ottaviano & Dino Pinelli, 2009. "Cultural Diversity and Economic Performance: Evidence from European Regions," Working Papers 2009.63, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2009.63
    as

    Download full text from publisher

    File URL: https://feem-media.s3.eu-central-1.amazonaws.com/wp-content/uploads/NDL2009-063.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Marco Manacorda & Alan Manning & Jonathan Wadsworth, 2006. "The Impact of Immigration on the Structure of Male Wages: Theory and Evidence from Britain," RF Berlin - CReAM Discussion Paper Series 0608, Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM).
    2. Ciccone, Antonio, 2002. "Agglomeration effects in Europe," European Economic Review, Elsevier, vol. 46(2), pages 213-227, February.
    3. Gianmarco I. P. Ottaviano & Giovanni Peri, 2021. "Rethinking The Effect Of Immigration On Wages," World Scientific Book Chapters, in: Firms and Workers in a Globalized World Larger Markets, Tougher Competition, chapter 9, pages 245-290, World Scientific Publishing Co. Pte. Ltd..
    4. Saiz, Albert, 2007. "Immigration and housing rents in American cities," Journal of Urban Economics, Elsevier, vol. 61(2), pages 345-371, March.
    5. Rachel M. Friedberg, 2001. "The Impact of Mass Migration on the Israeli Labor Market," The Quarterly Journal of Economics, Oxford University Press, vol. 116(4), pages 1373-1408.
    6. Marcus Berliant & Masahisa Fujita, 2008. "Knowledge Creation As A Square Dance On The Hilbert Cube," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(4), pages 1251-1295, November.
    7. Head, Keith & Mayer, Thierry, 2004. "The empirics of agglomeration and trade," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 59, pages 2609-2669, Elsevier.
    8. William Easterly & Ross Levine, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1203-1250.
    9. Alberto Abadie & Javier Gardeazabal, 2003. "The Economic Costs of Conflict: A Case Study of the Basque Country," American Economic Review, American Economic Association, vol. 93(1), pages 113-132, March.
    10. George J. Borjas & Richard B. Freeman & Lawrence F. Katz, 2021. "How Much Do Immigration and Trade Affect Labor Market Outcomes?," World Scientific Book Chapters, in: Foundational Essays in Immigration Economics, chapter 8, pages 163-234, World Scientific Publishing Co. Pte. Ltd..
    11. Redding, Stephen & Venables, Anthony J., 2004. "Economic geography and international inequality," Journal of International Economics, Elsevier, vol. 62(1), pages 53-82, January.
    12. Alberto Alesina & Reza Baqir & William Easterly, 1999. "Public Goods and Ethnic Divisions," The Quarterly Journal of Economics, Oxford University Press, vol. 114(4), pages 1243-1284.
    13. Easterly, William, 2001. "Can Institutions Resolve Ethnic Conflict?," Economic Development and Cultural Change, University of Chicago Press, vol. 49(4), pages 687-706, July.
    14. repec:hal:spmain:info:hdl:2441/10191 is not listed on IDEAS
    15. Gianmarco I.P. Ottaviano & Giovanni Peri, 2021. "The economic value of cultural diversity: evidence from US cities," World Scientific Book Chapters, in: Firms and Workers in a Globalized World Larger Markets, Tougher Competition, chapter 7, pages 187-222, World Scientific Publishing Co. Pte. Ltd..
    16. Card, David, 2001. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," Journal of Labor Economics, University of Chicago Press, vol. 19(1), pages 22-64, January.
    17. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
    18. Ottaviano, Gianmarco I.P. & Pinelli, Dino, 2006. "Market potential and productivity: Evidence from Finnish regions," Regional Science and Urban Economics, Elsevier, vol. 36(5), pages 636-657, September.
    19. Francesco D’Amuri & Gianmarco I.P. Ottaviano & Giovanni Peri, 2021. "The labor market impact of immigration in Western Germany in the 1990s," World Scientific Book Chapters, in: Firms and Workers in a Globalized World Larger Markets, Tougher Competition, chapter 8, pages 223-243, World Scientific Publishing Co. Pte. Ltd..
    20. Ciccone, Antonio & Hall, Robert E, 1996. "Productivity and the Density of Economic Activity," American Economic Review, American Economic Association, vol. 86(1), pages 54-70, March.
    21. Butcher, Kristin F & Card, David, 1991. "Immigration and Wages: Evidence from the 1980's," American Economic Review, American Economic Association, vol. 81(2), pages 292-296, May.
    22. Jean-Louis Arcand & Patrick Guillaumont & Sylviane Guillaumont Jeanneney, 2000. "How to make a tragedy: on the alleged effect of ethnicity on growth," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(7), pages 925-938.
    23. Joshua D. Angrist & Adriana D. Kugler, 2003. "Protective or counter-productive? labour market institutions and the effect of immigration on eu natives," Economic Journal, Royal Economic Society, vol. 113(488), pages 302-331, June.
    24. Alberto Alesina & Eliana La Ferrara, 2003. "Ethnic Diversity and Economic Performance," Harvard Institute of Economic Research Working Papers 2028, Harvard - Institute of Economic Research.
    25. Jonathan Temple, 1999. "The New Growth Evidence," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 112-156, March.
    26. Zimmermann, Klaus F. (ed.), 2005. "European Migration: What Do We Know?," OUP Catalogue, Oxford University Press, number 9780199257355.
    27. Kristin Butcher & David Card, 1991. "Immigration and Wages: Evidence From the 1980's," Working Papers 661, Princeton University, Department of Economics, Industrial Relations Section..
    28. Gianmarco I.P. Ottaviano & Giovanni Peri, 2021. "Cities and cultures," World Scientific Book Chapters, in: Firms and Workers in a Globalized World Larger Markets, Tougher Competition, chapter 6, pages 153-186, World Scientific Publishing Co. Pte. Ltd..
    29. Fearon, James D, 2003. "Ethnic and Cultural Diversity by Country," Journal of Economic Growth, Springer, vol. 8(2), pages 195-222, June.
    30. Ethan Lewis, 2003. "Local, open economies within the U.S.: how do industries respond to immigration?," Working Papers 04-1, Federal Reserve Bank of Philadelphia.
    31. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-1278, December.
    32. Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross‐Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
    33. Lazear, Edward P, 1999. "Globalisation and the Market for Team-Mates," Economic Journal, Royal Economic Society, vol. 109(454), pages 15-40, March.
    34. Temple, Jonathan R. W., 2001. "Generalizations that aren't? Evidence on education and growth," European Economic Review, Elsevier, vol. 45(4-6), pages 905-918, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dirk Dohse & Robert Gold, 2013. "Measuring Cultural Diversity at a Regional Level. WWWforEurope Working Paper No. 10," WIFO Studies, WIFO, number 46857, February.
    2. Gianmarco I.P. Ottaviano & Giovanni Peri, 2021. "The economic value of cultural diversity: evidence from US cities," World Scientific Book Chapters, in: Firms and Workers in a Globalized World Larger Markets, Tougher Competition, chapter 7, pages 187-222, World Scientific Publishing Co. Pte. Ltd..
    3. Lewis, Ethan & Peri, Giovanni, 2015. "Immigration and the Economy of Cities and Regions," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 625-685, Elsevier.
    4. Ottaviano, Gianmarco & Peri, Giovanni, 2008. "Immigration and National Wages: Clarifying the Theory and the Empirics," CEPR Discussion Papers 6916, C.E.P.R. Discussion Papers.
    5. Lemos, Sara & Portes, Jonathan, 2008. "New Labour? The Impact of Migration from Central and Eastern European Countries on the UK Labour Market," IZA Discussion Papers 3756, Institute of Labor Economics (IZA).
    6. Gianmarco I.P. Ottaviano & Giovanni Peri, 2021. "Cities and cultures," World Scientific Book Chapters, in: Firms and Workers in a Globalized World Larger Markets, Tougher Competition, chapter 6, pages 153-186, World Scientific Publishing Co. Pte. Ltd..
    7. Gianmarco I. P. Ottaviano, 2014. "Immigration, Diversity and the Labour Market Outcomes of Native Workers: Some Recent Developments," CEP Discussion Papers dp1292, Centre for Economic Performance, LSE.
    8. Tüzin Baycan & Peter Nijkamp, 2012. "A socio-economic impact analysis of urban cultural diversity: pathways and horizons," Chapters, in: Peter Nijkamp & Jacques Poot & Mediha Sahin (ed.), Migration Impact Assessment, chapter 5, pages 175-202, Edward Elgar Publishing.
    9. Thomas Kemeny, 2013. "Immigrant Diversity and Economic Development in Cities: A Critical Review," SERC Discussion Papers 0149, Centre for Economic Performance, LSE.
    10. Giovanni Peri & Chad Sparber, 2016. "Task Specialization, Immigration, and Wages," World Scientific Book Chapters,in: The Economics of International Migration, chapter 3, pages 81-115 World Scientific Publishing Co. Pte. Ltd..
    11. Jens Ruhose, 2015. "Microeconometric Analyses on Economic Consequences of Selective Migration," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 61, April.
    12. Chasapopoulos, Panagiotis, 2018. "The impact of international immigration and cultural diversity on economic performance, public attitudes and political outcomes in European regions," Other publications TiSEM d4a10f2a-c1a2-4edd-9887-2, Tilburg University, School of Economics and Management.
    13. Baycan, T. & Nijkamp, P., 2011. "A socio-economic impact analysis of cultural diversity," Serie Research Memoranda 0012, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    14. Chletsos Michael & Roupakias Stelios, 2019. "Do Immigrants Compete with Natives in the Greek Labour Market? Evidence from the Skill-Cell Approach before and during the Great Recession," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(2), pages 1-30, April.
    15. Camille Hémet & Clément Malgouyres, 2018. "Diversity and Employment Prospects: Neighbors Matter!," Journal of Human Resources, University of Wisconsin Press, vol. 53(3), pages 825-858.
    16. Marcus H. Böhme & Sarah Kups, 2017. "The economic effects of labour immigration in developing countries: A literature review," OECD Development Centre Working Papers 335, OECD Publishing.
    17. Andrés Rodríguez-Pose & Viola Berlepsch, 2019. "Does Population Diversity Matter for Economic Development in the Very Long Term? Historic Migration, Diversity and County Wealth in the US," European Journal of Population, Springer;European Association for Population Studies, vol. 35(5), pages 873-911, December.
    18. Kifle, Temesgen, 2009. "The effect of immigration on the earnings of native-born workers: Evidence from Australia," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(2), pages 350-356, March.
    19. Giovanni Peri & Chad Sparber, 2016. "Task Specialization, Immigration, and Wages," World Scientific Book Chapters, in: The Economics of International Migration, chapter 3, pages 81-115, World Scientific Publishing Co. Pte. Ltd..
    20. Bayar, Mehmet, 2016. "The impact of cultural diversity on the German housing market," Ruhr Economic Papers 662, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

    More about this item

    Keywords

    Cultural Diversity; Economic Performance; Productivity; Europe;
    All these keywords.

    JEL classification:

    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

    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:fem:femwpa:2009.63. See general information about how to correct material in RePEc.

    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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Alberto Prina Cerai (email available below). General contact details of provider: https://edirc.repec.org/data/feemmit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.