Migration and innovation Does cultural diversity matter for regional R&D activity

Migration and innovation Does cultural diversity matter for regional R&D activity

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Migration and innovation: Does cultural diversity matter for regional R&D activity? * Annekatrin Niebuhr 1 1 IAB Nord, Regional Research Network, Institute for Employment Research, Projensdorfer Straße 82, D-24106 Kiel, Germany (e-mail: [email protected]) Received: 27 April 2009 / Accepted: 20 September 2009 Abstract. Recent theoretical research deals with economic costs and benefits of cultural diver- sity related to immigration. However, empirical evidence regarding the impact of cultural diversity on economic performance is still scarce. We analyse the effect of cultural diversity of the labour force on patent applications for a cross-section of German regions. The results suggest that differences in knowledge and capabilities of workers from diverse cultural back- grounds enhance performance of regional R&D sectors. As regards innovation, the benefits of diversity seem to outweigh the costs caused, for example, by communication barriers. JEL classification: C21, J61, O31 Key words: Cultural diversity, regional innovation, knowledge production function, Germany 1 Introduction The significance of the immigration of qualified workers will rapidly increase in the ageing European economies since demographic change will cause a decline of the labour force and a sharp increase of the average age of workers. Foreign workers are already an important factor of the German economy. In 2004, almost 7% of all employees in Germany have foreign nationality. More than 100,000 highly skilled foreigners with a university degree work in Germany. Zimmermann (2005) notes that, in spite of the rising importance of migration, the issue is still controversial, and the understanding of the effects of international labour mobility is rather limited. Research on the economic consequences of migration has mainly focused on labour market effects and, more precisely, on the question whether immigrants depress wages and increase unemployment of native workers. Many analyses stress substitution effects among * I would like to thank Christoph Grenzmann (Stifterverband für die Deutsche Wissenschaft) for the generous provision of regional R&D data and Andrea Stöckmann for excellent research assistance. Financial support from the Volkswagen Foundation is gratefully acknowledged as part of the Study Group on Migration and Integration ‘Diversity, Integration and the Economy’. I thank Herbert Brücker, Eckhardt Bode, Stefan Fuchs, Rüdiger Wapler and anonymous referees for helpful comments and suggestions on an earlier version of this paper. The usual disclaimer applies. doi:10.1111/j.1435-5957.2009.00271.x © 2009 the author(s). Journal compilation © 2009 RSAI. Published by Blackwell Publishing, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden MA 02148, USA. Papers in Regional Science , Volume 89 Number 3 August 2010.
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native and foreign workers. However, taking into account that labour is not homogenous, the impact of immigration depends on whether migrants are skilled or unskilled and on labour market conditions in the host country.
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