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

This paper identifies the impact of cultural diversity on local economies, by explaining spatial disparities in wages and housing prices across Dutch cities using unique individual panel data of homeowners during the period 1999 and 2008. We distinguish between the effects of spatial sorting based on individual heterogeneity, interactions-based productivity effects, and consumer amenities while controlling for interactions between the labor and housing market. In line with previous literature, we find a positive effect of cultural diversity on average housing prices. After controlling for spatial sorting, the effect of cultural diversity on housing prices is negative. The negative impact of cultural diversity on local housing markets is likely driven by a causal effect between the presence of immigrants and neighborhood quality that outweighs a positive effect of immigrant-induced diversity in consumption goods. © 2013, Wiley Periodicals, Inc

Living apart together: The economic value of ethnic diversity in cities

In consumer cities, the presence and location of immigrants impacts house prices through two channels, which both can be valued positively as well as negatively: (i) their presence and contribution to population diversity and (ii) the creation of immigrant-induced consumer amenities like those associated with ethnic restaurants in terms of both their quantity as well as diversity. We hypothesize that these two mechanisms create a trade-off in which city dwellers want to live apart yet consume together. We use unique microdata of house prices and ethnic restaurants in the city of Amsterdam over the 1996–2011 period and a generalized propensity score (GPS) matching technique for multiple continuous treatments to estimate the trade-off between consumers’ love for ethnic goods and their variety on the one hand, and ethnic residential composition on the other hand. We find evidence for the existence of such a trade-off: proximity to ethnically diverse restaurants indeed compensates for a negative correlation between the presence of immigrants and house prices. This trade-off mostly holds for neighborhoods featuring both a diverse population and a high level of amenities in terms of restaurants

Living apart together: The economic value of ethnic diversity in cities

In consumer cities, the presence and location of immigrants impacts house prices through two channels, which both can be valued positively as well as negatively: (i) their presence and contribution to population diversity and (ii) the creation of immigrant-induced consumer amenities like those associated with ethnic restaurants in terms of both their quantity as well as diversity. We hypothesize that these two mechanisms create a trade-off in which city dwellers want to live apart yet consume together. We use unique microdata of house prices and ethnic restaurants in the city of Amsterdam over the 1996-2011 period and a generalized propensity score (GPS) matching technique for multiple continuous treatments to estimate the trade-off between consumers' love for ethnic goods and their variety on the one hand, and ethnic residential composition on the other hand. We find evidence for the existence of such a trade-off: proximity to ethnically diverse restaurants indeed compensates for a negative correlation between the presence of immigrants and house prices. This trade-off mostly holds for neighborhoods featuring both a diverse population and a high level of amenities in terms of restaurants