The economic value of cultural diversity: evidence from US cities

Gianmarco Ottaviano and Giovanni Peri

Chapter 7 in Firms and Workers in a Globalized World:Larger Markets, Tougher Competition, 2021, pp 187-222 from World Scientific Publishing Co. Pte. Ltd.

Abstract: What are the economic consequences to U.S. natives of the growing diversity of American cities? Is their productivity or utility affected by cultural diversity as measured by diversity of countries of birth of U.S. residents? We document in this paper a very robust correlation: US-born citizens living in metropolitan areas where the share of foreign-born increased between 1970 and 1990, experienced a significant increase in their wage and in the rental price of their housing. Such finding is economically significant and survives omitted variable bias and endogeneity bias. As people and firms are mobile across cities in the long run we argue that, in equilibrium, these correlations are consistent with a net positive effect of cultural diversity on the productivity of natives.

Keywords: Allocative Efficiency; Immigration; Inequality; Innovation; International Competition; International Trade; Macroeconomic Effects of Globalization; New Economic Geography; New Trade Theory; Offshoring; Regional Decline; Regional Growth; Territories; Waves of Globalization; Winners and Losers from Globalization; Borders; Creative Destruction; Cultural Diversity; Economic Geography; Economic Growth; Firm Heterogeneity; Firms and Workers; Globalization (search for similar items in EconPapers)
JEL-codes: F02 F6 F61 F62 (search for similar items in EconPapers)
Date: 2021
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Related works:
Chapter: The economic value of cultural diversity: evidence from US cities (2016)
Journal Article: The economic value of cultural diversity: evidence from US cities (2006)
Working Paper: The Economic Value of Cultural Diversity: Evidence from US Cities (2004)
Working Paper: The Economic Value of Cultural Diversity: Evidence from US Cities (2004)
Working Paper: The Economic Value of Cultural Diversity: Evidence from US cities (2004)
Working Paper: The Economic Value of Cultural Diversity: Evidence from US Cities (2004)
Working Paper: The Economic Value of Cultural Diversity: Evidence from US Cities (2004)
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