After Florida: Towards an economics of diversity

Abstract

In recent years, most European countries have experienced substantial demographic changes and rising cultural diversity. Understanding the social and economic impacts of these shifts is a major challenge for policymakers. Richard Florida's ideas have provided a popular-and pervasive-framework for doing so. This paper assess Florida's legacy and sets out a 'post-Florida' framework for 'technology, talent and tolerance' research. The paper first traces the development of Florida's ideas. 'Florida 1.0', encapsulated by the Three Ts framework, has performed badly in practice. There are problems bringing causality to the fundamental relationships, and in consistently replicating the results in other countries, although 'Florida 2.0' suggests that Creative Class metrics have value as alternative measures of human capital. These problems create space for a post-Florida agenda based on economic micro-foundations. I argue that the growing body of 'economics of diversity' research meets these conditions, and review theory and empirics. Urban 'diversity shocks' shift the size and composition of populations and workforces, so that economic effects operate via labour markets, and through wider production and consumption networks. While short term labour market effects are small, over time low-value industrial sectors may become migrantdependent. Diversity may help raise productivity and wages through innovation, entrepreneurship, market access and trade channels. Bigger, more diverse cities help generate hybridised goods and services, but may also raise local costs through crowding. In turn, this presents new challenges for policymakers, who need to manage diversity's net effects, and address both economic costs and benefits.

Critical urban cosmopolitanism and the governance of urban diversity in European cities

“…As Nathan (2015) shows, a diversity of workers and 'tolerant' and open forms of urban politics are presented as necessary ingredients for contemporary forms of urban growth as policy agendas echo the economic orthodoxies. The World Economic Forum (2015) even go as far as to highlight the importance of 'diversity dividends' in cities and places that are more diverse and possess a broader range of creative and entrepreneurial workers (see Syrett and Sepulveda, 2012) 2 .…”

The wider economic impacts of high-skilled migrants: a survey of the literature for receiving countries

“…In recent years, the economics of migration field has seen a rapid rise in studies exploring what we might call 'the wider effects of migration' -and the role of high-skilled migrants in these processes (Chiswick 2005;Huber et al 2010b;Kerr and Kerr 2011;George et al 2012;Hanson 2012;Lewis 2012;Nathan 2012a;Kerr 2013).…”

Putting a price on your neighbour

“…On the one hand, we have the white flight/avoidance literature that treats (some) minorities as a nuisance that some agents undertake costly action in order to avoid, Yinger (2014), Cutler et al (1999) and Bailey (1966). On the other hand, we have the Florida-inspired literature that focus on productivity gains from a diverse population and a diverse set of consumption possibilities arising out of a culturally diverse population, Ottaviano and Peri (2006), Nathan (2012) and Bakens et al (2013).…”