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Economic Impacts of Cultural Diversity in the Netherlands: Productivity, Utility, and Sorting

Economic Impacts of Cultural Diversity in the Netherlands: Productivity, Utility, and Sorting. Hamilton, April 2012 Jessie Bakens , Peter Mulder , Peter Nijkamp VU University Amsterdam Department of Spatial Economics. Average results.

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Economic Impacts of Cultural Diversity in the Netherlands: Productivity, Utility, and Sorting

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  1. Economic Impacts of Cultural Diversity in the Netherlands:Productivity, Utility, and Sorting Hamilton, April 2012 Jessie Bakens, Peter Mulder, Peter Nijkamp VU University Amsterdam Department of Spatial Economics

  2. Average results ***significant at 1%, ** at 5%, * at 10%. Heteroskedasticity‐robust standard error in parentheses. Source: own calculations based on CBS(GBA, SSB), NVM, ABF‐Real Estate monitor.

  3. But………. • Assumption of homogeneous agents • No role for sorting: spatial selection based on heterogeneous characteristics of residents • Parallel labour and housing markets • No role for local amenities

  4. Data • Dutch micro panel-data • Transaction costs houses (1999-2008) • Owner/worker characteristics • Firm characteristics • Amenities (cultural and other) • 126,959 observations (of 61,738 individuals)

  5. Research Question • What is the effect of cultural diversity on productivity and utility of Dutch residents?

  6. Identification strategy step I Framework inspired by Combes et al. (2008)* • Wage equation (1): • Housing price equation (2): *Combes, P., G. Duranton and L. Gobillon(2008). Spatial Wage Disparities: Sorting Matters!, Journal of Urban Economics, no. 63, pp. 723-742.

  7. Variance decomposition (1): results

  8. Variance decomposition (2): results

  9. Identification strategy step II • Labour market area-effect (wage residuals) (3): • Housing market area-effect (housing price residuals) (4):

  10. Results step II ***significant at 1%, ** at 5%, * at 10%. Heteroskedasticity‐robust standard error in parentheses. Source: own calculations based on CBS(GBA, SSB), NVM, ABF‐Real Estate monitor.

  11. Results step II cont’d ***significant at 1%, ** at 5%, * at 10%. Heteroskedasticity‐robust standard error in parentheses. Source: own calculations based on CBS(GBA, SSB), NVM, ABF‐Real Estate monitor.

  12. Conclusions • Cultural diversity impacts productivity and utility mainly through sorting. How does this black-box work: Creative class likes multi-culti environment? • In the housing market, area characteristics also matter • Negative effect of cultural diversity on rent residuals • Socio-economic effects outweigh migrant induced amenities Future research

  13. Acknowledgement • Financial support from NORFACE research programme (MIDI-REDIE project) on Migration in Europe - Social, Economic, Cultural and Policy Dynamics, is acknowledged. • The data on housing prices used in this research is provided by the Dutch association of real estate agencies: de NederlandseVereniging van Makelaarso.g. en vastgoeddeskundigen NVM. • CBS (Statistics Netherlands) provided data on Dutch residents and firms. • Ministry of Internal Affairs provided data from the Quality of Living index (Leefbaarometer).

  14. Thank you for your attention! j.bakens@vu.nl

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