Working Paper: CEPR ID: DP10241
Authors: Andrés Rodríguez-Pose; Daniel Hardy
Abstract: British regions are becoming increasingly culturally diverse, with migration as the main driver. Does this diversity benefit local economies? This research examines the impact of cultural diversity on the entrepreneurial performance of UK regions. We focus on two largely overlooked factors, the measurement of diversity, and the skills composition of diverse populations. First, more that demonstrating the importance of cultural diversity for entrepreneurship, we show that the type of cultural diversity measured is a decisive factor. Second, the skill composition of diverse populations is also key. Diversity amongst the ranks of the highly skilled exerts the strongest impact upon start-up intensities. The empirical investigation employs spatial regression techniques and carriers out several robustness checks, including instrumental variables specifications, to corroborate our findings.
Keywords: cultural diversity; entrepreneurship; high-skilled migration; knowledge spillovers
JEL Codes: F22; J24; L26; M13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Cultural diversity (Z10) | Knowledge stocks (O36) |
| Cultural diversity (Z10) | Entrepreneurship in knowledge-intensive sectors (O36) |
| Cultural diversity among highly skilled individuals (J61) | Startup intensities (L97) |
| Birthplace diversity (J69) | Entrepreneurial success (L26) |
| Cultural diversity (Z10) | Entrepreneurship (M13) |
| Cultural diversity (Z10) | Entrepreneurial activity (L26) |