Spillovers from immigrant diversity in cities

Abstract

Theory and evidence suggest that people born in different countries complement each other in the labor market. Immigrant diversity could augment productivity by enabling the combination of different skills, ideas and perspectives, resulting in greater productivity. Using matched employer–employee data for the USA, this paper evaluates this claim, and makes empirical and conceptual contributions to prior work. It addresses the potential bias from unobserved heterogeneity among individuals, work establishments and cities. The paper also identifies diversity impacts at both city and workplace scales, and considers how relationships vary across different segments of the labor market. Findings suggest that urban immigrant diversity produces positive and nontrivial spillovers for U.S. workers. This social return represents a distinct channel through which immigration may generate broad-based economic benefits.