Does Birthplace Diversity Affect Economic Complexity ? Cross-Country Evidence

Dany Bahar;Hillel Rapoport;Turati, Riccardo
(2019) , 52 pages

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Authors
  • Dany BaharThe Brookings Institution, Harvard CID, CESifo and IZA
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  • Hillel RapoportParis School of Economics, Université Paris 1 Panthéon-Sorbonne and CEPII
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  • Turati, Riccardoorcid-logoUCLouvain
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Abstract
We empirically investigate the relationship between a country's economic complexity and the diversity in the birthplaces of its immigrants. Our cross-country analysis suggests that birthplace diversity is strongly and positively associated with economic complexity. This holds particularly for diversity among highly educated migrants and for countries at intermediate levels of economic complexity. The results are robust to accounting for previous trends in birthplace diversity as well as to using alternatives diversity measures. We address endogeneity concerns by instrumenting diversity through predicted stocks from a pseudo-gravity model as well as from a standard shift-share approach. Finally, we provide evidence suggesting that birthplace diversity boosts economic complexity by increasing the diversification of the host country's export basket.
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Dany Bahar, Hillel Rapoport, & Turati, R. (2019). Does Birthplace Diversity Affect Economic Complexity ? Cross-Country Evidence (IRES Discussion papers 2019020). https://hdl.handle.net/2078.5/91232