Impact of cultural diversity on local labor markets. Evidence from Greece's “age of mass migration”

Abstract

This paper analyzes how the interaction of ethnicities and cultures impacts on productivity and employment on Greek local labor markets, within the 20‐year interval between 1991 and 2011. We compute two alternative proxies for cultural diversity, namely the fractionalization and the polarization index, using information on 118 countries of origin. We also account for the potential endogenous allocation of individuals across local labor markets by employing a “shift‐share” instrument, exploiting the fact that networks play an important role in the settlement patterns of recent migrants. Our identification strategy indicates that the contribution of diversity in terms of birthplace is positive, at least up to a certain point. This finding appears to be robust and not driven by the inclusion of further controls, outliers, spatial autocorrelation, and selection on unobservables. Interestingly, we find that ethnic heterogeneity helps employment and productivity by promoting sectoral diversity.

Foreign players, team production, and technical efficiency: Evidence from European soccer

“…Existing empirical evidence on the influence of diversity on productivity is rather unconclusive to date (see Ozgen, 2021 for a review). Whereas some authors report that that diversity is positively related with labor productivity (Roupakias & Dimou, 2020), others find negative (Dale-Olsen & TA B L E 1 Summary of studies on soccer productive efficiency.…”

“…Existing empirical evidence on the influence of diversity on productivity is rather unconclusive to date (see Ozgen, 2021 for a review). Whereas some authors report that that diversity is positively related with labor productivity (Roupakias & Dimou, 2020), others find negative (Dale‐Olsen & Finseraas, 2020; Lyons, 2017) or nonsignificant differences (Homroy & Soo, 2020; Trax et al., 2015). One potential explanation is that different types of diversity (gender, education, race, or nationality) exert distinct effects and vary depending on the case study and type of firm/setting considered.…”

“…Whereas traditionally the literature has focused on racial discrimination (Kahane, 2005;Szymanski, 2000), a growing body of research has started to pay attention to the effect of cultural diversity on team performance (Addesa et al, 2022;Beine et al, 2021;Kahane et al, 2013;Tovar, 2020). While several works have detected positive gains from labor factor diversity when working together through skill complementarities (e.g., Roupakias & Dimou, 2020), the international mixing of players into the same squad might on the contrary create communication barriers that produce integration costs, in-line with the seminal works by Lazear (1999aLazear ( , 1999b. Therefore, it is unclear whether teams benefit or not from internationally diverse squads, which has important economic implications for team management and hiring strategies.…”

The economics of diversity: Innovation, productivity and the labour market

“…More recent contributions on the impacts of diversity using the fractionalization index include Delgado Gómez-Flors and Alguacil (2018) focusing on wages in Spain; Elias and Paradies (2016) who examine Australian gross weekly wages; and Roupakias and Dimou's (2020) study of Greece which focuses on the employment of natives and log output per worker and finds an inverse-U shaped relationship between diversity and employment. These studies offer evidence from a number of countries that have not been studied before, yet the contribution of them, though important, is incremental.…”

Does Assimilation Shape the Economic Value of Immigrant Diversity?

“…However, much of the empirical research-especially in economic geography-considers the regional scale. While findings are not universally consistent, researchers mainly detect a robust, positive, and statistically significant relationship between immigrant diversity and productivity (Ottaviano and Peri 2006;Nathan 2011Nathan , 2015Kemeny 2012;Bellini et al 2013;Lee 2014;Suedekum, Wolf, and Blien 2014;Trax, Brunow, and Suedekum 2015;Nijkamp and Poot 2015;Delgado Gómez-Flors and Alguacil 2018;Kemeny and Cooke 2018;Roupakias and Dimou 2018). Contrasting findings include Bakens, Mulder, and Nijkamp (2013) Longhi (2013), and Elias and Paradies (2016).…”