 The Impact of a Culturally Diverse Workforce on Firms’ Revenues and ProductivityStephan Brunow and Peter Nijkamp International Regional Science Review, 2018, vol. 41, issue 1, 62-85 Abstract: There is evidence from the literature that firms enjoy higher productivity levels, when the workforce employed is culturally more diverse. It is an open question whether this gain is utilized to shift the supply curve and set lower prices in order to achieve a higher demand and possibly higher revenues. This knowledge gap is not addressed in the existing literature and forms the departure of our research. We introduce a reduced-form model, inspired by the study of Melitz and Ottaviano on heterogeneous firms, and add labor productivity by using the approach of Ottaviano and Peri on cultural diversity. In our empirical study, we employ German data, while the field of research is conducted for single plants, and industry-specific effects are taken into account. Our analysis shows significant positive effects of the cultural diversity of the high-skilled workforce on the market size of single establishments. We conclude that emerging productivity gains are not just paid as dividend or factor rewards but are also used to set lower prices in order to achieve higher demand. Keywords: cultural diversity; firm heterogeneity; market size (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:sae:inrsre:v:41:y:2018:i:1:p:62-85 Access Statistics for this article More articles in International Regional Science Review |
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