Ethnic Heterogeneity and Knowledge Formation in Europe
10 Pages Posted: 13 Nov 2012
Date Written: November 8, 2012
Is the interaction of diverse cultures a factor hampering or facilitating the creation of new ideas? In the present article we summarize results of a study investigating the role of ethnic heterogeneity of the labor force in the creation of new knowledge. We employ a panel of 20 European countries and we study the impact of the share of foreigners in the skilled labor force on two measures of innovation, namely the number of patents and the number of citations of scientific publications. The empirical findings indicate that greater ethnic diversity in the skilled professions is associated with greater innovation. What underlined hypotheses may drive such result? First, skilled foreigners contribute to enlarge the size of the skilled labor force, which in turn is responsible for larger innovation. Second, foreigners positively affect natives' productivity. The interaction of diverse culture and problem solving approaches may indeed favor the creation of new ideas.
Keywords: cultural diversity, innovation, skilled migration, knowledge production function, Europe
JEL Classification: F22, J24, O31
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