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Do regional social capital and trust matter for immigrant diversity and wages?

Author

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  • Silje Haus-Reve
  • Abigail Cooke

Abstract

Recent studies suggest that greater immigrant diversity in regions and workplaces increases productivity, and inclusive regional conditions are found to be important for this mechanism. Seeking to better understand this relationship, this paper broadens the dimensions and refines the measures of regional context pertaining to immigrant diversity outcomes. Regional measures of trust in foreigners and trust in government are tested under the hypothesis that regions with higher trust will have larger associations between rising immigrant diversity and increasing local wages. Additionally, we hypothesize that the benefits from immigrant diversity will be higher in regions with a strong social bridging culture, while the opposite will be the case in regions with a high level of social bonding. Looking across these novel and more nuanced dimensions of regional context, we find that they each matter in shaping the effects of diversity. Specifically, we find that spillovers from regional diversity are higher in regions with low levels of social bonding and in regions with high levels of trust, confirming the hypotheses. Evidence on regional variation in bridging social capital does not confirm the hypothesis. Using high quality longitudinal matched employer-employee data from Norway from 2001-2011, this paper provides a new case in the empirical diversity-productivity literature and novel evidence on the regional dimensions that shape this relationship.

Suggested Citation

  • Silje Haus-Reve & Abigail Cooke, 2019. "Do regional social capital and trust matter for immigrant diversity and wages?," Papers in Evolutionary Economic Geography (PEEG) 1932, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Nov 2019.
    • Handle: RePEc:egu:wpaper:1932
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    More about this item

    Keywords

    diversity; immigration; productivity; regions; institutions; social capital; trust; bridging; bonding;
    All these keywords.

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • F2 - International Economics - - International Factor Movements and International Business

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