Ethnic diversity and well-being
This paper investigates how ethnic diversity, measured by immigrants’ nationalities, influences the well-being of the host country. Using panel data from Germany from 1998 to 2012, we find a positive effect of ethnic diversity on the well-being of German natives. Our finding is robust to alternative definitions of ethnic diversity and to the non-random selection of natives and immigrants into regions. The positive effect of ethnic diversity is stronger for immigrant groups that are culturally and economically closer to Germany. Consistent with this result, we document the existence of two mechanisms explaining the influence of ethnic diversity on well-being: productivity—as captured by immigrants’ skills and assimilation—and social capital—particularly in relation to the creation of a multicultural environment.
KeywordsEthnic diversity Subjective well-being Assimilation Multiculturality
JEL ClassificationC90 D63 J61
We are grateful to two anonymous referees and the Editor Klaus F. Zimmermann for constructive feedback. We thank Peter Huber, Ruud J. A. Muffels, Jackie Wahba, and participants to the seminar at the Beijing Normal University, IOS Regensburg, Reflect at Tilburg University, and WIFO in Vienna for their useful comments. We are also indebted to Georgios Tassoukis for helping us collecting data from the German Federal Statistical Office and the statistical offices of the Länder.
Compliance with ethical standards
Conflict of interests
The authors declare that they have no conflict of interest.
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