Table 1 The Impacts of Immigration on Innovation: a Classification of Channels of Influence
From: The impact of cultural diversity on firm innovation: evidence from Dutch micro-data
Positive Channels | Negative Channels |
|---|---|
Within Firm | |
• Positive self-selection of immigrants: e.g., intelligence, creativity, willingness to take risks, entrepreneurship, “star” knowledge workers (e.g. trained in host country universities) • Youthfulness of immigrants: increased mobility, creativity, progressivity • Cultural diversity among immigrants: knowledge spillovers, new ideas and practices, trade facilitation (networks, trust, institutional knowledge) • Resilience of immigrants: enhances decision making • Immigrant supply enables firm expansion: reduces shortages/vacancies of key personnel | • Fractionalization of employees: cultural and language differences and barriers, leading to communication problems, less trust, greater potential for conflict among staff, discrimination • Greater labor intensity of production: lower reservation wages of immigrant workers lead to lower wage costs and, hence, lower capital investment in the short run (substitution effect), possibly offset by firm expansion in the long-run (output effect) |
Externalities | |
• Cultural diversity as an amenity: increased availability of ethnic goods and services in the community • Population growth: agglomeration advantages, greater demand and gross fixed capital formation, with new technology embodied in new capital • Community cohesion: bridging-type social capital leads to cross-cultural cooperation | • Sorting: Residential and labor mobility leads to greater spatial segregation: less cross-cultural relations and trade, lower spatial mobility and knowledge transfers • Polarization: Bonding-type social capital leads to between-group conflicts • Representation: Political fragmentation and instability |