The Economic Value of Cultural Diversity: Evidence from Us Cities

49 Pages Posted: 27 Feb 2004

See all articles by Gianmarco I.P. Ottaviano

Gianmarco I.P. Ottaviano

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

Giovanni Peri

University of California, Davis - Department of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: February 2004

Abstract

We use data on wages and rents in different US cities to assess the amenity effects on production and consumption of cultural diversity as measured by diversity of countries of birth of city residents. We show that US-born citizens living in metropolitan areas where the share of foreign-born increased between 1970 and 1990 have experienced a significant average increase in their wage and in the rental price of their housing. Such finding is economically significant and robust to omitted variable bias and endogeneity bias. We then present a model in which cultural diversity may have both production and consumption amenity or disamenity effects. As people and firms are mobile across cities in the long run, the model implies that the joint results from the wage and rent regressions are consistent with a dominant production amenity effect of cultural diversity.

Keywords: Cultural diversity, productivity, local amenities, urban economics

JEL Classification: F10, O40, R00

Suggested Citation

Ottaviano, Gianmarco I.P. and Peri, Giovanni, The Economic Value of Cultural Diversity: Evidence from Us Cities (February 2004). CEPR Discussion Paper No. 4233. Available at SSRN: https://ssrn.com/abstract=510021

Gianmarco I.P. Ottaviano (Contact Author)

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

Via Gobbi 5
Milan, 20136
Italy

Giovanni Peri

University of California, Davis - Department of Economics ( email )

One Shields Drive
Davis, CA 95616-8578
United States
530-752-3033 (Phone)
530-752-9382 (Fax)

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