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Measuring Cultural Diversity and its Impact on Innovation: Longitudinal Evidence from Dutch firms

  • Ceren Ozgen

    ()

    (Department of Spatial Economics, VU University Amsterdam)

  • Peter Nijkamp

    ()

    (Department of Spatial Economics, VU University Amsterdam)

  • Jacques Poot

    ()

    (National Institute of Demographic and Economic Analysis, University of Waikato)

To investigate econometrically whether cultural diversity of a firm’s employees boosts innovation, we create a unique linked employer-employee dataset that combines data from two innovation surveys in The Netherlands with administrative and tax data. We calculate three distinct measures of diversity. We find that firms that employ fewer foreign workers are generally more innovative, but that diversity among a firm’s foreign workers is positively associated with innovation activity. The positive impact of diversity on product or process innovations is greater among firms in knowledge-intensive sectors and in internationally-oriented sectors. The impact is robust to accounting for endogeneity of foreign employment.

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Paper provided by Norface Research Programme on Migration, Department of Economics, University College London in its series Norface Discussion Paper Series with number 2013003.

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Date of creation: Jan 2013
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Handle: RePEc:nor:wpaper:2013003
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  1. Audretsch, David B. & Feldman, Maryann P., 2004. "Knowledge spillovers and the geography of innovation," 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 61, pages 2713-2739 Elsevier.
  2. Morten Jensen & Bjorn Johnson & Edward Lorenz & B.-A. Lundvall, 2007. "Forms of knowledge and modes of innovation," Post-Print halshs-00483642, HAL.
  3. Jennifer Hunt & Marjolaine Gauthier-Loiselle, 2008. "How Much Does Immigration Boost Innovation?," Departmental Working Papers 2008-07, McGill University, Department of Economics.
  4. Ozgen, Ceren & Nijkamp, Peter & Poot, Jacques, 2011. "The Impact of Cultural Diversity on Innovation: Evidence from Dutch Firm-Level Data," IZA Discussion Papers 6000, Institute for the Study of Labor (IZA).
  5. Joshua Angrist, 1999. "Estimation of Limited-Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice," Working papers 99-31, Massachusetts Institute of Technology (MIT), Department of Economics.
  6. Ozgen, Ceren & Nijkamp, Peter & Poot, Jacques, 2011. "Immigration and Innovation in European Regions," IZA Discussion Papers 5676, Institute for the Study of Labor (IZA).
  7. David M. Cutler & Edward L. Glaeser & Jacob L. Vigdor, 2005. "Is the Melting Pot Still Hot? Explaining the Resurgence of Immigrant Segregation," NBER Working Papers 11295, National Bureau of Economic Research, Inc.
  8. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S71-102, October.
  9. Gianmarco I.P. Ottaviano & Giovanni Peri, 2006. "The economic value of cultural diversity: evidence from US cities," Journal of Economic Geography, Oxford University Press, vol. 6(1), pages 9-44, January.
  10. Charles I. Jones & Paul M. Romer, 2010. "The New Kaldor Facts: Ideas, Institutions, Population, and Human Capital," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(1), pages 224-45, January.
  11. Genc, Murat & Gheasi, Masood & Nijkamp, Peter & Poot, Jacques, 2011. "The Impact of Immigration on International Trade: A Meta-Analysis," IZA Discussion Papers 6145, Institute for the Study of Labor (IZA).
  12. Kerr, William R., 2010. "Breakthrough inventions and migrating clusters of innovation," Journal of Urban Economics, Elsevier, vol. 67(1), pages 46-60, January.
  13. Pierpaolo Parrotta & Dario Pozzoli & Mariola Pytlikova, 2011. "The Nexus between Labor Diversity and Firm's Innovation," Norface Discussion Paper Series 2011005, Norface Research Programme on Migration, Department of Economics, University College London.
  14. Suedekum, Jens & Wolf, Katja & Blien, Uwe, 2009. "Cultural Diversity and Local Labour Markets," IZA Discussion Papers 4619, Institute for the Study of Labor (IZA).
  15. Alesina, Alberto & La Ferrara, Eliana, 2005. "Ethnic Diversity and Economic Performance," Scholarly Articles 4553005, Harvard University Department of Economics.
  16. Niebuhr, Annekatrin, 2006. "Migration and innovation: Does cultural diversity matter for regional R&D activity?," HWWI Research Papers 3-1, Hamburg Institute of International Economics (HWWI).
  17. William R. Kerr & William F. Lincoln, 2008. "The Supply Side of Innovation: H-1B Visa Reforms and US Ethnic Invention," Harvard Business School Working Papers 09-005, Harvard Business School.
  18. David Mare & Richard Fabling & Steven Stillman, 2011. "Immigration and Innovation," CReAM Discussion Paper Series 1110, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  19. de Graaff, Thomas & Nijkamp, Peter, 2010. "Socio-economic impacts of migrant clustering on Dutch neighbourhoods: In search of optimal migrant diversity," Socio-Economic Planning Sciences, Elsevier, vol. 44(4), pages 231-239, December.
  20. Scott E. Page, 2007. "Prologue to The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies
    [The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and So
    ," Introductory Chapters, Princeton University Press.
  21. George J. Borjas, 2001. "Does Immigration Grease the Wheels of the Labor Market?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 32(1), pages 69-134.
  22. J. Alverez & David Forrest & I. Sanz & J. D. Tena, 2008. "Impact of Importing Foreign Talent on Performance Levels of Local Co-workers," IASE Conference Papers 0823, International Association of Sports Economists.
  23. Ceren Ozgen, 2011. "The Impact of Cultural Diversity on Innovation: Evidence from Dutch Firm-Level Data," Norface Discussion Paper Series 2011013, Norface Research Programme on Migration, Department of Economics, University College London.
  24. Lobo, José & Strumsky, Deborah, 2008. "Metropolitan patenting, inventor agglomeration and social networks: A tale of two effects," Journal of Urban Economics, Elsevier, vol. 63(3), pages 871-884, May.
  25. Jonathan V. Beaverstock & Sarah Hall, 2012. "Competing for talent: global mobility, immigration and the City of London's labour market," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 5(2), pages 271-288.
  26. Angrist, Joshua D, 2001. "Estimations of Limited Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice: Reply," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(1), pages 27-28, January.
  27. Acs, Zoltan J & Audretsch, David B, 1988. "Innovation in Large and Small Firms: An Empirical Analysis," American Economic Review, American Economic Association, vol. 78(4), pages 678-90, September.
  28. Jacques Poot, 2007. "Demographic Change and Regional Competitiveness: The Effects of Immigration and Ageing," Population Studies Centre Discussion Papers dp-64, University of Waikato, Population Studies Centre.
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