Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/207446 
Year of Publication: 
2019
Series/Report no.: 
IZA Discussion Papers No. 12621
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
We study the importance of linguistic diversity in the workplace for workplace productivity. While cultural diversity might improve productivity through new ideas and innovation, linguistic diversity might increase communication costs and thereby reduce productivity. We apply a new measure of languages' linguistic proximity to Norwegian linked employer-employee Manufacturing data from 2003-12, and find that higher workforce linguistic diversity decreases productivity. We find a negative effect also when we take into account the impact of cultural diversity. As expected proficiency in Norwegian of foreign workers improves since their time of arrival in Norway, the detrimental impact disappears.
Subjects: 
productivity
diversity
language diversity
GMM
JEL: 
J15
D24
J24
Document Type: 
Working Paper

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