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Birthplace Diversity and Economic Prosperity

  • Alesina, Alberto

    ()

    (Harvard University)

  • Harnoss, Johann

    ()

    (Harvard University)

  • Rapoport, Hillel

    ()

    (Paris School of Economics)

We use recent immigration data from 195 countries and propose an index of population diversity based on people's birthplaces. This new index is then decomposed into a size (share of foreign born) and a variety (diversity of immigrants) component and is available for 1990 and 2000 disaggregated by skill level. We show that birthplace diversity is largely uncorrelated with ethnic, linguistic or genetic diversity. Our main result is that the diversity of skilled immigration relates positively to economic development (as measured by income and TFP per capita and patent intensity) even after controlling for ethno-linguistic and genetic fractionalization, geography, trade, education, institutions, and origin-effects capturing income/productivity levels in the immigrants home countries. We make progress towards addressing endogeneity by specifying a gravity model to predict the share and diversity of immigration based on exogenous bilateral variables. The results are robust across various OLS and 2SLS specifications and suggestive of skill complementarities between native workers and immigrants, especially when the latter come from richer countries at intermediate levels of cultural proximity.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7568.

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Length: 64 pages
Date of creation: Aug 2013
Date of revision:
Handle: RePEc:iza:izadps:dp7568
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