Working Paper: NBER ID: w10904
Authors: Gianmarco Ottaviano; Giovanni Peri
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 only with a net positive effect of cultural diversity on productivity of natives.
Keywords: Cultural Diversity; Economic Productivity; Immigration; US Cities
JEL Codes: O4; R0; F1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| cultural diversity (Z10) | wages (J31) |
| cultural diversity (Z10) | rental prices (R31) |
| cultural diversity (Z10) | productivity (O49) |
| cultural diversity (Z10) | utility (L90) |
| cultural diversity (Z10) | employment (J68) |
| cultural diversity (Z10) | population (J11) |