Economic research on diversity

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  • This map refers to 2001
  • Economic research on diversity

    1. 1. Economic research on diversity: international perspectives<br />Jacques Poot<br />Professor of Population Economics<br />Diversity Research Forum <br />Claudelands Event Centre, Hamilton<br />Monday 22 August 2011<br />
    2. 2. What is the focus of economic research on diversity? (*) = covered in this presentation<br />Measurement of diversity (*)<br />Wages and employment (*)<br />Productivity and innovation (*)<br />Consumption and trade (*)<br />Segregation and segmentation<br />Discrimination<br />Decision-making<br />
    3. 3. Diversity has many dimensions<br />Research covers: gender, age, ethnicity, birthplace/nationality, disability, sexual orientation, religion<br />This presentation focuses on diversity through international migration only<br />
    4. 4. Global migrant diversity trends can be measured by a diversity index<br /><ul><li>Just measuring the number of countries of birth present in a nation is not very informative
    5. 5. Instead, a simple diversity index calculates: </li></ul>1 – sum of the squared shares of each country<br /> of origin in the population<br /><ul><li>The closer to 1 the diversity index is, the more diverse the population is</li></li></ul><li>“Continent of Birth” diversity of the world’s population (including the “host” population)<br />
    6. 6. “Continent of Birth” diversity of the world’s population (excluding the “host” population)<br />
    7. 7. Socio-economic impacts of international migration and population diversity<br />There is a need for a comprehensive multidisciplinary approach: Migration Impact Assessment (MIA)<br />MIA is not the same as Cost-Benefit Analysis (CBA)<br />MIA is also multi-method: using quan, qual and mixed methods, and meta-analysis<br />
    8. 8. A summary: Longhi et al. (2010) in Environment and Planning C – Government and Policy<br />Wage and employment impacts of immigration on the host population are almost negligibly small<br />Migrants usually ‘complement’ host population work force but are ‘substitutes’ for earlier migrants with similar skills<br />Institutions matter: in the US wage effects are bigger than employment effects; in Europe it is the opposite<br />Migration ‘greases the wheels’ of the labour market<br />Meta-analyses of labour market impacts<br />
    9. 9. Impact of diversity on productivity and innovation<br />Forbes Insights report August 2011 “Fostering Innovation Through a Diverse Workforce”<br />Method: survey of 321 executives of large global enterprises; some in-depth interviews <br />Conclusions:<br />Diversity is a key driver of innovation and success on a global scale!<br />Competition for ‘talent’ is fierce in today’s global economy<br />There has been a lot of progress on gender and ethnic diversity/inclusion, but less on disability and age<br />
    10. 10. Diversity and innovation: Research on patent applications<br />European data<br />2001<br />
    11. 11. Patent applications per million inhabitants andthe share of foreign residents in 170 NUTS 2 regions in 1991 and 2001<br />Positive relationship, but not necessarily linear<br />The correlation coefficient increased from 0.33 to 0.48<br />The patents pattern is less clustered in 2001<br />
    12. 12. Economists are trying hard to solve the causality problem by new techniques:<br />Finding ‘instrumental variables’<br />Finding ‘counterfactuals’<br />Using ‘natural experiments’<br />Using policy-linked randomization<br />In the case of diversity and innovation research, we found an interesting ‘instrument’<br />Does correlation imply causation?<br />
    13. 13. EU12 NUTS2 regions | Obs Mean Std. Dev. Min Max<br />-------------+--------------------------------------------------------<br /> McDonald’s (number) | 340 26.95882 24.74134 0 189<br /> Per million population | 340 13.49947 7.086818 0 33.6<br />Other instruments: the presence of a capital city; the area of the region<br />
    14. 14. Impact of diversity on patent applications in Europe<br />An increase in the diversity index by 0.1 from the regional mean of 0.5 increases patent applications per million inhabitants by about 0.2 percent!<br />
    15. 15. From macro to micro: Dutch data on innovation<br />This study combines 4 confidential high-quality firm/individual level micro-datasets obtained from Statistics Netherlands. <br />Social Statistics Survey (SSB_Banen - REOS) – 10 million obs.<br />Community Innovation Survey (CIS 3.5), (Survey + Census of firms with >100 empl.) <br /> 10 000 obs.<br />Dutch Labour Force Survey (EBB) – 83 000 obs.<br />Dutch Municipality registrations (GBA) – 16 million obs.<br />CIS: is a regular snapshot of infrastructure /inputs /outputs /obstacles of innovation by firms<br /> EBB: is a regular screening of labour market and employees on household /ethnicity /country of birth /job situation /education /trade union /commuting <br />15<br />
    16. 16. Results from the analysis of Dutch data<br />“Solving” the causality problem with instruments for predicting predict the share of foreign born in the firm in 2002: <br />the number of foreign restaurants per 10 000 municipality population <br />the migrant population stock in 1996 <br />Main conclusion: Employing more migrants does not boost innovation, but, among those firms that hire skilled immigrants, greater diversity of the foreign workers enhances product innovation! <br />
    17. 17. Channels through which immigrants influence trade <br />Population growth through migration increases aggregate demand: increases imports<br />Immigrants have a preference for home country products (ethnic goods and services): increases imports<br />However, once demand is large enough, firms may produce home country goods locally: lowers imports<br />If immigrants contribute to making firms more efficient, international competitiveness increases: increases exports, lowers imports<br />Migrant networks reduce transaction costs through better information exchange, facilitating communication in foreign language, enhanced trust in trading relationship, enforceability of contracts: increases both imports and exports<br /><ul><li>Migrant networks are important for both the host country (immigrants) and the home country (diaspora/expats)</li></li></ul><li>Meta-analysis of the impact of immigration on international trade <br />There have been 48 studies since the 1990s that yielded more than 200 estimates<br />All studies use the same theory: the ‘gravity model’ of trade<br />Each study reports the % change in trade when the number of immigrants in the population increases by 1%<br />
    18. 18. Estimates around the world<br />
    19. 19. An increase in the number of immigrants by 10 percent increases the volume of trade by about 1-2 percent. <br />The impact is lower for trade in homogeneous goods. <br />The migrant impact on imports is on average similar to that of exports. <br />The migrant impact appears to be greater for migration between countries of different levels of development. <br />Broad conclusions of the trade meta-analysis<br />
    20. 20. Relevance of this MIA research for New Zealand<br />MIA suggests generally positive or neutral economic impacts<br />However, old myths die hard!<br />NZ, Australian and Canadian policies are generally seen as better than elsewhere, consequently:<br />(1) are expected to yield even better impacts<br />(2) are become ‘role model’ for policy development <br />
    21. 21. Hodgson and Poot (2010) New Zealand Research on the Economic Impacts of Immigration 2005–2010 - Synthesis and research agenda. Download from http://www.dol.govt.nz/publications/research/synthesis-research/<br />Nijkamp, Poot and Sahin (eds.) (2012) Migration Impact Assessment: New Horizons. Edward Elgar.<br />Interested in more details?<br />
    22. 22. Thank you!<br />

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