Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/55076
Year of Publication: 
2011
Series/Report no.: 
IZA Discussion Papers No. 6000
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
Due to the growth in international migration in recent decades, the workforce of firms in host countries has become considerably more diverse, both demographically and culturally. It is an important question for firms and for governments to ask whether there are some productivity-enhancing externalities gained from this growing diversity within firms. In recent years migration research has demonstrated positive economic impacts of cultural diversity on productivity and innovation at the regional level. However, there is a dearth of research on the links between innovation and migrant diversity at the firm level. In this paper we construct and analyse a unique linked employer-employee micro-dataset of 4582 firms, based on survey and administrative data obtained from Statistics Netherlands. Excluding firms in the hospitality industry and other industries that employ low-skilled migrants, we use the local number of restaurants with foreign cuisines and the historical presence of migrant communities as valid instruments of endogenous migrant settlement. We find that firms in which foreigners account for a relatively large share of employment are somewhat less innovative. However, there is strong evidence that firms that employ a more diverse foreign workforce are more innovative, particularly in terms of product innovations.
Subjects: 
immigration
innovation
cultural diversity
knowledge spillovers
linked employer-employee data
Netherlands
JEL: 
D22
F22
O31
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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