Is Tolerance Good or Bad for Growth?

35 Pages Posted: 22 Oct 2010

See all articles by Niclas Berggren

Niclas Berggren

Research Institute of Industrial Economics (IFN); University of Economics, Prague - Faculty of Economics and Public Administration

Mikael Elinder

Uppsala University - Department of Economics; Research Institute of Industrial Economics (IFN)

Date Written: October 22, 2010

Abstract

We investigate to what extent tolerance, as measured by attitudes toward different types of neighbors, affects economic growth. Data from the World Values Survey enable us to investigate tolerance-growth relationships for 54 countries. We provide estimates based on cross-sectional as well as panel-data regressions. In addition we test for robustness with respect to model specification and sample composition. Unlike previous studies, by Richard Florida and others, we find that tolerance toward homosexuals is negatively related to growth. For tolerance toward people of a different race, we do not find robust results, but the sign of the estimated coefficients is positive, suggesting that inclusion of people irrespective of race makes good use of productive capacity. We propose mechanisms to explain these divergent findings, which clarify why different kinds of tolerance may be of different economic importance.

Keywords: Tolerance, Growth, Diversity, Human Capital, Creativity, Innovation

JEL Classification: O40, Z13

Suggested Citation

Berggren, Niclas and Elinder, Mikael, Is Tolerance Good or Bad for Growth? (October 22, 2010). IFN Working Paper No. 846, Available at SSRN: https://ssrn.com/abstract=1695931 or http://dx.doi.org/10.2139/ssrn.1695931

Niclas Berggren

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

HOME PAGE: http://www.ifn.se/nb

University of Economics, Prague - Faculty of Economics and Public Administration ( email )

nám. W. Churchilla 4
Praha, 130 67
Czech Republic

Mikael Elinder (Contact Author)

Uppsala University - Department of Economics ( email )

Box 513
Uppsala, 751 20
Sweden

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

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