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 16: Ethnic diversity and firm productivity in the Netherlands

Jan Möhlmann and Jessie Bakens


The increasing ethnic diversity of the population of many developed countries has prompted the question of whether a more diverse society increases economic growth. Previous research shows that cities and regions with more culturally diverse inhabitants (based on the country of birth, ethnicity or linguistic background of people) have higher average wages and higher economic growth (see e.g. Bellini et al., 2013; Ottaviano and Peri, 2005, 2006; Sparber, 2010; Suedekum et al., 2009). This suggests that interactions between diverse people at the level of the city increase economic performance. The arguments for these effects are often derived from the seminal work of Jacobs (1961, 1969). In her research on the economics of cities she stresses the importance of a diverse sector and firm structure in cities to maintain urban economic growth. The key to urban economic growth lies in the ability of firms to translate technologies and ideas from other sectors or other firms to their own production processes in order to innovate and keep up with changes in demand or supply of any factor that affects a firm. Applied to diversity of the population, the parallel argument is that a more diverse labour force in cities will increase productivity.

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