Urban Immigrant Diversity and Inclusive Institutions

Abigail Cooke and Tom Kemeny

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: Recent evidence suggests that rising immigrant diversity in cities offers economic benefits, including improved innovation, entrepreneurship and productivity. One potentially important but underexplored dimension of this relationship is how local institutional context shapes the benefits firms and workers receive from the diversity in their midst. Theory suggests that institutions can make it less costly for diverse workers to transact, thereby catalyzing the latent bene ts of heterogeneity. This paper tests the hypothesis that the effects of immigrant diversity on productivity will be stronger in locations featuring more “inclusive" institutions. It leverages comprehensive longitudinal linked employer-employee data for the U.S. and two distinct measures of inclusive institutions at the metropolitan area level: social capital and pro- or anti-immigrant ordinances. Findings confirm the importance of institutional context: in cities with low levels of inclusive institutions, the benefits of diversity are modest and in some cases statistically insignificant; in cities with high levels of inclusive institutions, the benefits of immigrant diversity are positive, significant, and substantial. Moreover, natives residing in cities that have enacted laws restricting immigrants enjoy no diversity spillovers whatsoever, while immigrants in these cities continue to receive a diversity bonus. These results confirm the economic significance of urban immigrant diversity, while suggesting the importance of local social and economic institutions.

Pages: 38 pages
Date: 2016-01
New Economics Papers: this item is included in nep-bec, nep-ino, nep-lab, nep-mig, nep-soc and nep-ure
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Citations: View citations in EconPapers (1)

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https://www2.census.gov/ces/wp/2016/CES-WP-16-07.pdf First version, 2016 (application/pdf)

Related works:
Journal Article: Urban Immigrant Diversity and Inclusive Institutions (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:16-07

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