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Economic Impacts of Cultural Diversity in the Netherlands: Productivity, Utility, and Sorting

Author

Listed:
  • Jessie Bakens

    (VU University Amsterdam)

  • Peter Mulder

    (VU University Amsterdam)

  • Peter Nijkamp

    (VU University Amsterdam)

Abstract

This discussion paper resulted in an article in the Journal of Regional Science (2013). Volume 53, issue 1, pages 8-36. This paper identifies the role of cultural diversity in explaining spatial disparities in wages and housing prices across Dutch cities, using unique individual panel data of home owners. We distinguish between the effects of interactions-based productivity, consumption amenities and sorting of heterogeneous home owners while controlling for interactions between the labor and housing market. We find that an increase in the cultural diversity of the population positively impacts equilibrium wages and housing prices, particularly in the largest and most densely populated cities. This result is largely driven by spatial sorting of individuals in both the labor and housing market. After controlling for home owner heterogeneity we find that increasing cultural diversity no longer impacts local labor markets and negatively impacts local housing markets. The latter result is likely to be driven by a negative causal effect of increased cultural diversity on neighb orhood quality that outweighs a positive effect of increased cultural diversity in consumption goods.

Suggested Citation

  • Jessie Bakens & Peter Mulder & Peter Nijkamp, 2012. "Economic Impacts of Cultural Diversity in the Netherlands: Productivity, Utility, and Sorting," Tinbergen Institute Discussion Papers 12-024/3, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20120024
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    Keywords

    cultural diversity; immigrants; local amenities; sorting; housing prices; productivity;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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