Cultural Diversity and Economic Performance: Evidence from European Regions

Giovanni Prarolo (), Elena Bellini (), Gianmarco .P. Ottaviano and Dino Pinelli
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Gianmarco .P. Ottaviano: University of Bologna, FEEM and CEPR
Dino Pinelli: FEEM

No 2009.63, Working Papers from Fondazione Eni Enrico Mattei

Abstract: We investigate the relationship between diversity and productivity in Europe using an original dataset covering the NUTS 3 regions of 12 countries of the EU15 (Austria, Belgium, Denmark, France, former Western Germany, Ireland, Italy, the Netherlands, Portugal, Spain, Sweden and the United Kingdom). In so doing, we follow the empirical methodology developed by Ottaviano and Peri (2006a) in the case of US cities. The main idea is that, as cultural diversity may affect both production and consumption through positive or negative externalities, the joint estimation of price and income equations is needed to identify the dominant effect. Based on this methodology, we find that diversity is positively correlated with productivity. Moreover, we find evidence that causation runs from the former to the latter. These results for EU regions are broadly consistent with those found by Ottaviano and Peri for US cities.

Keywords: Cultural Diversity; Economic Performance; Productivity; Europe (search for similar items in EconPapers)
JEL-codes: O5 O11 O57 R5 R58 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cul, nep-eec, nep-eff, nep-geo, nep-sbm, nep-soc and nep-ure
Date: 2009-08

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Persistent link: http://EconPapers.repec.org/RePEc:fem:femwpa:2009.63

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