The regional impact of cultural diversity on wages: evidence from Australia

Table 6 Weighted OLS and FE estimates comparing the impact of diversity on wages for different groups. Dependent variable: log of weekly wages

Explanatory variables	Australian-born sample		Migrant sample		Movers		Non-movers
	OLS	FE	OLS	FE	OLS	FE	OLS	FE
	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
Diversity index	0.650***	0.340*	0.436***	−0.318	0.639***	0.180	0.607***	−0.089
	(0.087)	(0.180)	(0.127)	(0.320)	(0.086)	(0.138)	(0.127)	(0.510)
Demographic controls	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Human capital controls	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Time dummies^a	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Individual effects	No	Yes	No	Yes	No	Yes	No	Yes
Observations	16,756	16,410	3400	3296	12,284	12,044	7872	7662
Adjusted R-squared	0.565	0.318	0.569	0.376	0.561	0.366	0.574	0.339
First stage for diversity index
Predicted diversity index	0.599***	0.260***	0.664***	0.292***	0.573***	0.338***	0.679***	−0.162***
	(0.018)	(0.030)	(0.038)	(0.098)	(0.020)	(0.035)	(0.027)	(0.039)
Instrument tests
Underidentification test^b	512.43	56.74	99.50	6.98	350.60	68.57	290.56	16.87
p value	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000
Weak identification test^c	1113.17	75.02	312.33	8.92	846.59	95.97	628.93	17.24

Values are estimated for the HILDA wave 4–11 respondents aged 16–45 years. Robust standard errors are in parentheses and are adjusted for clusters by individuals. The reported sample sizes differ from the original (n = 44,634) due to sample weighting and lagging. Demographic controls include age and age-squared in all models, plus gender and marital status in the OLS models. Human capital controls include education, weekly hours worked, and job tenure, in all models, plus English language skill in OLS
Significance values indicate *p < 0.1; **p < 0.05; ***p < 0.01
^aTime dummies are partialled out in the FE models
^bBased on the Kleibergen-Paap rk LM statistic
^cBased on the Kleibergen-Paap rk Wald F statistic: Stock-Yogo weak ID test critical value maximal IV sizes range as follows: 16.38 (10 %), 8.96 (15 %), 6.66 (20 %), and 5.53 (25 %)