EconPapers    
Economics at your fingertips  
 

Does Labor Diversity Affect Firm Productivity?

Pierpaolo Parrotta (), Dario Pozzoli () and Mariola Pytlikova ()

No 10-12, Working Papers from University of Aarhus, Aarhus School of Business, Department of Economics

Abstract: Using an employer-employee dataset, we analyze how diversity in cultural background, skills and demographic characteristics affects total factor productivity (TFP) of firms in Denmark. Implementing structural estimation of firms’ production function, we find evidence that labor diversity in skills/education significantly enhances firm performance as measured by firm TFP. Conversely, diversity in demographics and ethnicity brings mixed results – both dimensions of workforce diversity have either no or negative effects on firm TFP. Hence, it seems as if the negative effects, coming from communication and integration costs connected to a more demographically and culturally diverse workforce, counteract the positive effects of diversity on firm TFP, coming from creativity and knowledge spillovers. However, we find that ethnic diversity is valuable for firms operating in industries characterized by above-average trade openness, giving support to the hypothesis that an ethnically diverse workforce provides information and access to global markets.

Keywords: Labor diversity; skill complementarities; communication barriers; total factor productivity (search for similar items in EconPapers)
JEL-codes: C23 J24 L20 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-eff, nep-hrm and nep-mic
Date: 2010-12-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24) Track citations by RSS feed

Downloads: (external link)
http://www.hha.dk/nat/wper/10-12_pipaetal.pdf (application/pdf)

Related works:
Working Paper: Does Labor Diversity Affect Firm Productivity? (2012) Downloads
Working Paper: Does Labor Diversity affect Firm Productivity? (2011) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:aareco:2010_012

Access Statistics for this paper

More papers in Working Papers from University of Aarhus, Aarhus School of Business, Department of Economics The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark. Contact information at EDIRC.
Bibliographic data for series maintained by Helle Vinbaek Stenholt (). This e-mail address is bad, please contact .

 
Page updated 2019-11-12
Handle: RePEc:hhs:aareco:2010_012