Working Paper: NBER ID: w18699
Authors: Alberto Alesina; Johann Harnoss; Hillel Rapoport
Abstract: We use recent immigration data from 195 countries and propose an index of population diversity based on people's birthplaces. This new index is then decomposed into a size (share of foreign born) and a variety (diversity of immigrants) component and is available for 1990 and 2000 disaggregated by skill level. We show that birthplace diversity is largely uncorrelated with ethnic, linguistic, or genetic diversity. Our main result is that the diversity of skilled immigration relates positively to economic development (as measured by income and TFP per capita and patent intensity) even after controlling for ethno-linguistic and genetic fractionalization, geography, trade, education, institutions and origin-effects capturing income/productivity levels in the immigrants' home countries. We make progress towards addressing endogeneity by specifying a gravity model to predict the share and diversity of immigration based on exogenous bilateral variables. The results are robust across various OLS and 2SLS specifications and suggestive of skill complementarities between native workers and immigrants, especially when the latter come from richer countries at intermediate levels of cultural proximity.
Keywords: birthplace diversity; economic prosperity; skilled immigration
JEL Codes: F22; F43; O1; O4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| birthplace diversity (J69) | economic development (O29) |
| diversity of skilled immigration (J61) | income per capita (D31) |
| diversity of skilled immigration (J61) | total factor productivity (TFP) (D24) |
| birthplace diversity (J69) | economic outcomes (F61) |
| birthplace diversity from wealthier countries (J61) | economic outcomes (F61) |
| birthplace diversity from countries with intermediate cultural proximity (F29) | economic outcomes (F61) |
| birthplace diversity (J69) | economic outcomes (F61) |