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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