Cultural Diversity and Economic Performance: Evidence from European Regions

33 Pages Posted: 31 Aug 2009

See all articles by Giovanni Prarolo

Giovanni Prarolo

University of Bologna; University of Milan - Centro Studi Luca d'Agliano (LdA)

Elena Bellini

Fondazione Eni Enrico Mattei (FEEM)

Gianmarco I.P. Ottaviano

Bocconi University - Department of Economics and Paolo Baffi Centre on Central Banking and Financial Regulation

Dino Pinelli

Fondazione Eni Enrico Mattei (FEEM), Milan

Date Written: August 28, 2009

Abstract

We investigate the relationship between diversity and productivity in Europe using an original dataset covering the NUTS 3 regions of 12 countries of the EU15 (Austria, Belgium, Denmark, France, former Western Germany, Ireland, Italy, the Netherlands, Portugal, Spain, Sweden and the United Kingdom). In so doing, we follow the empirical methodology developed by Ottaviano and Peri (2006a) in the case of US cities. The main idea is that, as cultural diversity may affect both production and consumption through positive or negative externalities, the joint estimation of price and income equations is needed to identify the dominant effect. Based on this methodology, we find that diversity is positively correlated with productivity. Moreover, we find evidence that causation runs from the former to the latter. These results for EU regions are broadly consistent with those found by Ottaviano and Peri for US cities.

Keywords: Cultural Diversity, Economic Performance, Productivity, Europe

JEL Classification: O5, O11, O57, R5, R58

Suggested Citation

Prarolo, Giovanni and Bellini, Elena and Ottaviano, Gianmarco I.P. and Pinelli, Dino, Cultural Diversity and Economic Performance: Evidence from European Regions (August 28, 2009). FEEM Working Paper No. 63.2009. Available at SSRN: https://ssrn.com/abstract=1463199 or http://dx.doi.org/10.2139/ssrn.1463199

Giovanni Prarolo (Contact Author)

University of Bologna ( email )

Piazza Scaravilli 2
Bologna, 40100
Italy

HOME PAGE: http://www2.dse.unibo.it/prarolo/

University of Milan - Centro Studi Luca d'Agliano (LdA) ( email )

Via P. Amedeo 34
Milano, Mi 20122
Italy

Elena Bellini

Fondazione Eni Enrico Mattei (FEEM) ( email )

Corso Magenta 63
Milan, Milan 20123
Italy

Gianmarco I.P. Ottaviano

Bocconi University - Department of Economics and Paolo Baffi Centre on Central Banking and Financial Regulation ( email )

Via Gobbi 5
Milan, 20136
Italy

Dino Pinelli

Fondazione Eni Enrico Mattei (FEEM), Milan ( email )

Corso Magenta 63
20123 Milan
Italy
39 02 52036944 (Phone)
39 02 52036946 (Fax)

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