Does immigrant diversity affect productivity? The Spanish experience

Abstract

The consequences of the massive waves of migration in recent years have attracted a growing amount of attention in the field of economics. Traditionally, concern over this matter has focused on the possible effects of replacing more expensive native workers with a cheaper workforce made up of immigrants. However, recent literature points out that this evaluation may be incomplete, as it ignores the potential benefits derived from a greater cultural diversity related to immigration. The aim of this work is to analyse the impact of migration diversity on productivity at a regional level for the specific case of Spain. To do so, we have based our research on three different diversity indexes, as proposed by Kemeny and Cooke (2018) and Alesina et al. (2003). The model is estimated by using instrumental variables techniques taking into account the potential simultaneity between migration diversity and productivity. The results confirm the positive influence of a greater diversity of immigrants’ birthplaces on workers’ productivity in Spain. Our findings reveal that a higher rate of young and skilled labour also encourages productivity.