Chapter 13: A US state-level analysis of self-employment, cultural diversity, and risk tolerance
Whether culture affects economic issues is really not in question in the social sciences; there clearly are important impacts both from culture to economics and vice versa. Marx ( 1987), Veblen (1909), and Weber ( 1992) all provide justification for studying culture and institutions. A region’s culture is a contributing factor for a variety of economic issues, like economic growth (Tabellini, 2010), migration (Bauer, Epstein, and Gang, 2002), and labor productivity (Ottaviano and Peri, 2006). Guiso, Sapienza, and Zingales (2006) provide a detailed review of the literature related to economics and culture. The mixing of cultures can be beneficial in generating product and process innovations due to knowledge spillovers. Consumers may also be inspired to purchase a wider range of products and services when those around them come from different cultural and linguistic backgrounds. Diversity, however, can also cause inefficiencies. For example, a very high level of linguistic diversity may create communication difficulties between speakers of the different languages. Also, if different cultural groups become a large enough share of the local population, groups could become insular, resulting in infrequent interactions with other groups (Ottaviano and Peri, 2006).
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