A Cost of Integration? : Exploring the Short-Term Effects of Birthplace Diversity on Economic Growth

University essay from Uppsala universitet/Nationalekonomiska institutionen; Uppsala universitet/Nationalekonomiska institutionen

Abstract: Increased global migration has spurred a vibrant current of research into the economic effects of cultural diversity. Birthplace diversity has become an important indicator used to measure cultural diversity caused by bilateral migration. We detect a lack of studies that explore the short-term effects of birthplace diversity on economic growth. Using a panel dataset including data from 110 countries between years 1990 and 2014, we explore the short-term effects of birthplace diversity on GDP per capita growth. We anticipated that birthplace diversity would carry short-term costs that would negatively affect economic performance, and that the positive effects of birthplace diversity found in previous studies would materialize only in the long-run. Our results provide only weak support for our hypothesis. In the long run our results do indicate a small positive effect of increased birthplace diversity among immigrants on GDP per capita growth, and an increase of the relative size of the immigrant stock correlates with lower GDP per capita growth in the short run, in a more pronounced and negative way.

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