Immigration, diversity and institutions

This paper examines the relationship between immigration and host countries’ institutional quality, using international migration data, and two composite metrics, encompassing multiple dimensions of governance. Moreover, we construct indicators of cultural diversity, such as fractionalization and polarization, to capture potential effects from multiculturalism. To reduce endogeneity concerns, we employ pseudo gravity-based instruments in a 2SLS setting. Overall, our findings suggest that counties with higher immigrant concentrations and cultural polarization display lower levels of institutional quality. Notably, however, the impact on countries with healthy institutions appear to be negligible.