Abstract
Using an employer-employee dataset, we analyze how diversity in cultural background, skills and demographic characteristics a?ects total factor productivity (TFP) of ?rms in Denmark. Implementing structural estimation of ?rms' production function, we ?nd evidence that labor diversity in skills/education signi?cantly enhances ?rm performance as measured by ?rm TFP. Conversely, diversity in demographics and ethnicity brings mixed results - both dimensions of workforce diversity have either no or negative e?ects on ?rm TFP. Hence, it seems as if the negative e?ects, coming from communication and integration costs connected to a more demographically and culturally diverse workforce, counteract the positive e?ects of diversity on ?rm TFP, coming from creativity and knowledge spillovers. However, we ?nd that ethnic diversity is valuable for ?rms operating in industries characterized by above-average trade openness, giving support to the hypothesis that an ethnically diverse workforce provides information and access to global markets.
| Original language | English |
|---|---|
| Place of publication | Aarhus |
| Publisher | Aarhus School of Business |
| Number of pages | 52 |
| ISBN (Print) | 9788778824608 |
| ISBN (Electronic) | 9788778824615 |
| Publication status | Published - 2010 |
Keywords
- Labor diversity
- Skill complementarities,
- Communication barriers
- Total factor productivity