Full Citation

Title: A Theory of Racial Diversity, Segregation, and Productivity

Citation Type: Working Paper

Publication Year: 2007

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Abstract: Empirical evidence illustrates that diversity generates both economic costs and benefits. This paper develops a theoretical model that accounts for the positive and deleterious effects of heterogeneity. First, an expanded Solow Growth Model demonstrates that the direct effects of diversity can be positive or negative, and depend upon the size of fixed parameter values. Second, diversity also influences individuals’ location decisions. Segregation (variation of diversity across regions) always reduces national output per worker, so if diversity induces integration, it indirectly augments productivity as well. Finally, political policies aimed at reducing interaction costs across groups may actually reduce aggregate output per worker by encouraging segregation.

Url: https://econpapers.repec.org/paper/cgtwpaper/2007-03.htm

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Authors: Sparber, Chad

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Publication Number: 2007-03

Institution: Colgate University

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Publisher Location: Madison County, New York

Data Collections: IPUMS USA

Topics: Housing and Segregation, Labor Force and Occupational Structure, Race and Ethnicity

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