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Linguistic Diversity and Workplace Productivity

Harald Dale-Olsen () and Henning Finseraas ()
Additional contact information
Harald Dale-Olsen: Institute for Social Research, Oslo
Henning Finseraas: Institute for Social Research, Oslo

No 12621, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We study the importance of linguistic diversity in the workplace for workplace productivity. While cultural diversity might improve productivity through new ideas and innovation, linguistic diversity might increase communication costs and thereby reduce productivity. We apply a new measure of languages' linguistic proximity to Norwegian linked employer-employee Manufacturing data from 2003-12, and find that higher workforce linguistic diversity decreases productivity. We find a negative effect also when we take into account the impact of cultural diversity. As expected proficiency in Norwegian of foreign workers improves since their time of arrival in Norway, the detrimental impact disappears.

Keywords: productivity; diversity; language diversity; GMM (search for similar items in EconPapers)
JEL-codes: J15 D24 J24 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2019-09
New Economics Papers: this item is included in nep-eff, nep-hrm, nep-lma and nep-ure
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