Economic impacts of cultural diversity in The Netherlands: productivity, utility and sorting

J. Bakens, P. Mulder, P. Nijkamp

Research output: Contribution to journalArticle

Abstract

This paper identifies the impact of cultural diversity on local economies, by explaining spatial disparities in wages and housing prices across Dutch cities using unique individual panel data of homeowners during the period 1999 and 2008. We distinguish between the effects of spatial sorting based on individual heterogeneity, interactions-based productivity effects, and consumer amenities while controlling for interactions between the labor and housing market. In line with previous literature, we find a positive effect of cultural diversity on average housing prices. After controlling for spatial sorting, the effect of cultural diversity on housing prices is negative. The negative impact of cultural diversity on local housing markets is likely driven by a causal effect between the presence of immigrants and neighborhood quality that outweighs a positive effect of immigrant-induced diversity in consumption goods. © 2013, Wiley Periodicals, Inc.
LanguageEnglish
Pages8-36
JournalJournal of Regional Science
Volume53
DOIs
StatePublished - 2013

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cultural diversity
economic impact
sorting
Netherlands
productivity
housing
housing market
immigrant
homeowner
local economy
panel data
amenity
interaction
wage
labor market
effect
price

Cite this

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title = "Economic impacts of cultural diversity in The Netherlands: productivity, utility and sorting",
abstract = "This paper identifies the impact of cultural diversity on local economies, by explaining spatial disparities in wages and housing prices across Dutch cities using unique individual panel data of homeowners during the period 1999 and 2008. We distinguish between the effects of spatial sorting based on individual heterogeneity, interactions-based productivity effects, and consumer amenities while controlling for interactions between the labor and housing market. In line with previous literature, we find a positive effect of cultural diversity on average housing prices. After controlling for spatial sorting, the effect of cultural diversity on housing prices is negative. The negative impact of cultural diversity on local housing markets is likely driven by a causal effect between the presence of immigrants and neighborhood quality that outweighs a positive effect of immigrant-induced diversity in consumption goods. {\circledC} 2013, Wiley Periodicals, Inc.",
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Economic impacts of cultural diversity in The Netherlands: productivity, utility and sorting. / Bakens, J.; Mulder, P.; Nijkamp, P.

In: Journal of Regional Science, Vol. 53, 2013, p. 8-36.

Research output: Contribution to journalArticle

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AU - Mulder,P.

AU - Nijkamp,P.

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AB - This paper identifies the impact of cultural diversity on local economies, by explaining spatial disparities in wages and housing prices across Dutch cities using unique individual panel data of homeowners during the period 1999 and 2008. We distinguish between the effects of spatial sorting based on individual heterogeneity, interactions-based productivity effects, and consumer amenities while controlling for interactions between the labor and housing market. In line with previous literature, we find a positive effect of cultural diversity on average housing prices. After controlling for spatial sorting, the effect of cultural diversity on housing prices is negative. The negative impact of cultural diversity on local housing markets is likely driven by a causal effect between the presence of immigrants and neighborhood quality that outweighs a positive effect of immigrant-induced diversity in consumption goods. © 2013, Wiley Periodicals, Inc.

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