The Economics of Cultural Diversity
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The Economics of Cultural Diversity

Edited by Peter Nijkamp, Jacques Poot and Jessie Bakens

The populations of many countries in the world are becoming more culturally diverse. This spurs a growing need for an informed debate on the socio-economic implications of cultural diversity. This book offers a solid statistical and econometric perspective on this topical subject by bringing together studies from different countries in Europe and North America. The research in this volume sheds light on several consequences of cultural diversity, including positive impacts on innovation, growth and entrepreneurship, with contributions highlighting how there can be negative social effects on communities. Throughout the volume, it is evident that the effects of cultural diversity on socio-economic outcomes depend largely on the characteristics of local economies, populations and communities.
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Chapter 13: A US state-level analysis of self-employment, cultural diversity, and risk tolerance

Brian J. Osoba


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 ([1867] 1987), Veblen (1909), and Weber ([1930] 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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