Economics of Diversity

Prepared by the Roy Wilkins Center for Human Relations and Social Justice, Hubert H. Humphrey Institute, University of Minnesota. Contact Dr. Samuel L. Myers, Jr., for more information, myers006@umn.edu Alesina, Alberto F. and Eliana La Ferrara. 2005. Ethnic Diversity and Economic Performance. Journal of Economic Literature 43(3)(September): 762-800. http://www.jstor.org/stable/4129475 We survey and assess the literature on the positive and negative effects of ethnic diversity on economic policies and outcomes. Our focus is on communities of different size and organizational structure, such as countries, cities in developed countries, and villages and groups in developing countries. We also consider the endogenous formation of political jurisdictions and highlight several open issues in need of further research, in particular the endogenous formation of ethnic identity and the measurement of ethnic diversity. Alesina, Alberto F. and Eliana La Ferrara. 2000. Participation in Heterogeneous Communities. The Quarterly Journal of Economics 115(3)(Aug.): 847-904. http://www.jstor.org/stable/2586898 This paper studies the socio-economic determinants of participation in groups and social activities. This is an important issue for more than one reason. For example, political participation (voting and political action) has critical implications on policy choices. If participation is low and the wealthy or more educated have a disproportionate propensity to vote and engage in political action, then public policies may be tilted in their favor. This may lead to vicious circles, in which disadvantaged minorities participate less, have less 'voice' and become even more disadvantaged, leading to a variety of social problems. Second, participation has important economic effects. For instance, macroeconomists have argued that active interactions amongst individuals lead to transmission of knowledge, increases in aggregate human capital, and the development of 'trust', which improves the functioning of markets. In addition, social interactions and networks affect many individual outcomes, from criminal activities, to fertility, to the labor supply. Even though participation is typically associated with 'positive' socio-economic outcomes, social networks may also transmit 'negative' norms. For example, the so called 'culture of poverty and welfare' may find its roots in social networks propagating incentives to search for welfare rather than work. Alesina, Alberto F. and Eliana La Ferrara. 2000. "Who Trusts Others?" Journal of Public Economics 85(2) 207-34. http://ideas.repec.org/a/eee/pubeco/v85y2002i2p207234.html Both individual experiences and community characteristics influence how much people trust each other. Using individual level data drawn from US localities we find that the strongest factors associated with low trust are: (i) a recent history of traumatic

experiences; (ii) belonging to a group that historically felt discriminated against, such as minorities (blacks in particular) and, to a lesser extent, women; (iii) being economically unsuccessful in terms of income and education; (iv) living in a racially mixed community and/or in one with a high degree of income disparity. Religious beliefs and ethnic origins do not significantly affect trust. The role of racial cleavages leading to low trust is confirmed when we explicitly account for individual preferences on inter racial relationships: within the same community, individuals who express stronger feelings against racial integration trust relatively less the more racially heterogeneous the community is. Anand, Sudhir and Paul Segal. 2008. What Do We Know about Global Income Inequality, Journal of Economic Literature 46(1)(March): 5794. In this paper, we review the recent literature on global interpersonal income inequality. While all estimates agree that the level is very high, with a Gini of between 0.630 and 0.686 in the 1990s, there is no consensus regarding the direction of change. We discuss methodological issues, including the use of national accounts versus survey-based estimates of mean income (or consumption) and the choice of purchasing power parity exchange rates. Findings of a rise or fall in global income inequality are not robust across different estimation methods and datasets. Given the diversity of estimates and various sources of uncertainty, including gaps and errors in the underlying data, we conclude there is insufficient evidence to determine the direction of change in global interpersonal inequality in recent decades.

Arcand, Jean-Louis, Patrick Guillaumont and Sylviane Guillaumont Jeanneney. 2000. "How to Make a Tragedy: On the Alleged Effect of Ethnicity on Growth." Journal of International Development 12(7): 925-38. http://www3.interscience.wiley.com/journal/75000665/abstract This paper questions the line of reasoning followed by several authors, notably Easterly and Levine according to which ethno-linguistic fragmentation, because it leads to poor policies, is the main factor explaining the tragedy of low African growth. A first set of criticism concerns the model itself and stresses that current empirical work is unable to convincingly identify the channels through which ethnic fragmentation affects growth: (i) polarization may be more relevant than fragmentation, (ii) the various tests of the effect of ethnicity on the quality of policy are far from being conclusive. A second set of remarks concerns the relevance of these studies to Africa: the African sub-sample is often quite limited, and the relationship is unstable (according to Chow tests). It actually appears that ethnicity has a more important effect on growth in Africa than elsewhere. This still needs to be explained and is not as such an explanation for lower African growth. Bates, Robert H . 2000. "Ethnicity and Development in Africa: A Reappraisal." American Economic Review 90(2): 131-34. http://www.jstor.org/stable/117206

Those who study modem Africa commonly highlight three features: its poverty, its instability, and its ethnic diversity. Whether in lurid popularizations (e.g., Robert Kaplan, 1994) or in social scientific research (e.g., William Easterly and Ross Levine, 1997; but see also Paul Collier and A. Hoeffler [1998]) scholars reason that Africa is poor because it is unstable and that its instability derives from its ethnic complexity. Ethnicity thus lies, it is held, at the root of Africa's development crisis. This essay critiques the conventional wisdom by mounting an alternative interpretation. Using both qualitative and quantitative data from Africa, this article argues that: (i) by providing political structures that render credible implicit contracts between generations, ethnic groups promote the formation of human capital; and (ii) (ii) ethnic diversity does not imply political violence (although the reverse may be true). While developing a line of reasoning that runs counter to the conventional wisdom, the essay also identifies a range within which the conventional wisdom may be true (i.e., within which ethnic diversity may promote the outbreak of violence, resulting in the loss of life and property). Bean, Frank D. and Mark A Leach. 2005. Critical Disjuncture? The Culmination of Post-World War II Socio-Demographic and Economic Trends in the United States. Journal of Population Research 22(1)(May): 63-78. This essay examines the consequences of major social, demographic & economic trends in the United States since World War II. These include rising women's employment, the "Baby Boom", the outlines of the so-called "new" immigration, the increasing racial & ethnic diversity deriving from that immigration, the economic contexts in which recent US immigration has occurred, & recent technologically-induced features of global work flows that will condition immigration's future reception & effects. Women's wartime work experiences, together with their economic opportunities in the ensuing decades, boosted married women's autonomy & domestic leverage. Rising economic prosperity encouraged marriage & family formation even as growing employment among married women of childbearing age made having & taking care of large families more difficult. World War II also spawned the expansion of migration to the United States, which in turn converted the country from a largely biracial society with a sizable white majority & a small black minority into a multiracial, multiethnic society with greater racial & ethnic boundary crossing & increasingly blurred colour lines. A major issue is whether currently changing economic conditions & social institutions will support & strengthen such tendencies or instead weaken them. Without robust job growth, the demographic legacy of the baby boom, which now involves ever-rising numbers of retired people, will be more difficult to support, especially given the country's current fiscal deficits. Greater earnings inequality & weak job growth may also poison the climate for further immigration to the US, thus diminishing the chance that newcomers can continue contributing to the dissolution of fault lines among racial-ethnic groups & to the resolution of periodic labour shortages. Tables, Figures, References. Adapted from the source document.

Bond, Michael T; Vicky L. Seiler, and Michael J. Seiler. 2003 The Effects of Multicultural Diversity in Real Estate Brokerage. Journal of Real Estate Research 25(4)(October-December): 529-42. This study examines the changing diversity of home buyers and the steps brokerage firms are taking to adapt to these changes. The results reveal that larger firms are experiencing a greater increase in customer diversity. This can be partly explained by their efforts to target diverse groups through sponsored seminars and hiring minority sales professionals. A survey of minority home buyers reveals that minorities have owned fewer homes, earn less and are younger than their non-minority counterparts. Race and income were found to significantly explain reports of greater difficulty on the road to home ownership. Bloch, Francis and Vijayendra Rao. 2001. "Statistical Discrimination and Social Assimilation." Economics Bulletin 10(2): 1-5. http://www.economicsbulletin.uiuc.edu/2001/volume10/EB-01J70001A.pdf Social assimilation has been observed in many societies where members of the minority group suffer from discrimination. In this note, we provide a simple economic model of assimilation and show that the adoption of the social behavior of the dominant group can be used as a signal by high productivity members of the minority group. Borjas, George. 1987. Immigrants, Minorities, and Labor Market Competition. Industrial and Labor Relations Review 40(3): 382-392. This paper investigates the extent of labor market competition among immigrants, minorities, and the native population. An analysis of 1980 U.S. Census data reveals that immigrants tend to be a substitutes for some labor market groups and complements for others. The effects of shifts in immigrant supply on the earnings of native-born men are, however, very small. On the other hand, increases in the supply of immigrants do have a sizable impact on the earnings of immigrants themselves: an increase of 10 percent in the supply of immigrants, for example, reduces the immigrant wage by about 10 percent. Burnim, Mickey L and David W. Rasmussen. 1982. The Changing Status of Economic Minorities, 1948-1977. Review of Black Political Economy 12(1)(Fall): 5-14. Carter, David A, Betty J. Simkins and W. Gary Simpson. 2003. Corporate Governance, Board Diversity, and Firm Value. Financial Review 38(1)(February): 33-53. This study examines the relationship between board diversity and firm value for Fortune 1000 firms. Board diversity is defined as the percentage of women, African Americans, Asians, and Hispanics on the board of directors. This research is important because it presents the first empirical evidence examining whether board diversity is associated with improved financial value. After controlling for size, industry, and other corporate governance measures, we find significant positive relationships between the fraction of women or minorities on the board and firm value. We also find that the proportion of

women and minorities on boards increases with firm size and board size, but decreases as the number of insiders increases. Cervero, Robert and Michael Duncan. 2004 Neighbourhood Composition and Residential Land Prices: Does Exclusion Raise or Lower Values? Urban Studies 41(2)(Special Issue February): 299-315. Hedonic price models are used to explore the degree to which land-use and racial composition, used as outcome proxies for local zoning practices, influence residential land values in Santa Clara County, California. Fiscal pressures have prompted many California communities to zone on the basis of tax-yield potential, especially in fastgrowing settings like Santa Clara County. Controlling for variables related to job accessibility as well as proximity to regional transport infrastructure, the analysis shows that indicators of land-use diversity and jobs-housing balance generally correlate with high residential land prices. While the fiscal instincts of Californian municipalities is to shun housing in favour of commercial development and thus to create imbalanced land development patterns, this research suggests these fiscal advantages are partly offset by lower land values and thus lower property tax intake. Racial diversity, on the other hand, lowered residential property values, even when controlling for neighbourhood factors like average household income. This finding suggests that, to the degree that local zoning responds to land-market forces, exclusion in residential settings is more a product of racial than land-use composition. As long as land markets attach either values or disbenefits to land-use mix and racial diversity, market-sensitive zoning policies that reinforce these outcomes will be likely to prevail, particularly in buoyant real-estate markets like Santa Clara County. Chang, Mitchell J., Alexander W. Astin and Dongbin Kim. 2004. Cross-racial Interaction among Undergraduates: Some Consequences, Causes, and Patterns Research. Higher Education 45(5)(August): 529-553. http://www.springerlink.com/content/q13303673815842w/fulltext.pdf This study utilized a national longitudinal data set of college students to examine the educational relevance of cross-racial interaction and how campuses can best structure such opportunities. The general pattern of findings suggests that cross-racial interaction has positive effects on students intellectual, social, and civic development. The results show that institutions could enhance such experiences by enrolling larger proportions of students of color and by offering students more opportunities to live and work part-time on campus. While these findings apply uniformly to white students, the frequency of cross-racial interaction does not always follow an expected path of steady gains for students of color as the student body becomes increasingly more diverse. Implications of the findings are discussed. Coleman, David and Robert Rowthorn. 2004. The Economic Effects of Immigration into the United Kingdom. Population and Development Review 30(4)(Dec.): 579624.

Abstract This article is concerned with the economic effects of immigration. The emphasis is on Britain, but extensive material is also provided on other countries. Since 1997 a new British immigration policy has displaced previous policy aims, which were focused on minimizing settlement. Large-scale immigration is now seen as essential for Britain's economic well-being, & measures have been introduced to increase inflows. The benefits claimed include fiscal advantages, increased prosperity, a ready supply of labor, & improvements to the age structure. Fears that large-scale immigration might damage the interests of unskilled workers are discounted. This article examines these claims. It concludes that the economic consequences of large-scale immigration are mostly minor, negative, or transient, that the interests of more vulnerable sections of the domestic population may well be damaged, & that any economic benefits are unlikely to bear comparison with immigration's probable substantial & permanent demographic & environmental impact. Our claims are in line with those from other developed countries. 9 Tables, 6 Figures, 139 References. Adapted from the source document. Collier, Paul, 2001. Implications of Ethnic Diversity. Economic Policy 32(16):127-66. http://www.jstor.org/stable/3601036

Collier, Paul. 2000. Ethnicity, Politics and Economic Performance. Economics and Politics 12(3)(November): 225-45. The paper investigates the effects of ethnic diversity on economic performance. Previous studies have found that diversity has various detrimental microeconomic effects, tending to reduce public sector performance, and has large detrimental effects on the overall growth rate. I develop a simple model of the effect of ethnic diversity on a government decision problem in which there is a tradeoff between growth and distribution, in the contexts of democracy and dictatorship. I find that in democracy ethnic diversity has no effect upon the decision, whereas in dictatorship ethnic diversity leads to a government choice that reduces the growth rate. I then test these propositions on two data sets. The first is for 94 countries over the period 1960-90. I find that whether diversity adversely affects overall economic growth depends upon the political environment. Diversity is highly damaging to growth in the context of limited political rights, but is not damaging in democracies. The second is for World Bank projects in 89 countries. I find that the same relationship between diversity and democracy affects the proportion of projects that are successful.

de Oliver, Miguel and Teresa Dawson-Munoz. 1996. Place-Not-Race?" The Inadequacy of Geography to Address Racial Disparities. Review of Black Political Economy 25(2)(Fall): 37-60. Emerging in policy disputes concerning affirmative action for non-Anglos is the notion of substituting geographic "place" for "race" as the principal standard for distributing social policy dollars to develop poverty-stricken urban non-Anglo populations. Through demographic analysis at progressively smaller geographic scales this article shows that

the proposition that "place" can be the sole criterion for government policies designed to relieve urban non-Anglo poverty is problematic. Place-based programs do not take into account the racial diversity of impoverished areas, thereby diminishing the ability to target non-Anglo populations. Nor do they take into account the differing economic and educational profiles of racial groups in an impoverished area which tend to disproportionately distribute a place-based program's opportunities in favor of Anglos. Ferraro, Paul J. and Ronald G. Cummings. 2007. Cultural Diversity, Discrimination, and Economic Outcomes: An Experimental Analysis. Economic Inquiry 45(2)(April): 217-32. Does cultural diversity affect economic outcomes? We develop an experimental framework that complements ongoing research on this question. We vary the ethnic mix of bargaining sessions to study intercultural interactions among members of U.S. Hispanic and Navajo cultures. We control for demographic differences in our subject pools and elicit beliefs directly in order to differentiate between statistical discrimination and preference-based discrimination. Hispanic and Navajo subjects behave differently, and their behavior is affected by the ethnic composition of the experimental session. Our experimental framework can shed light on economic behavior and outcomes in societies of mixed ethnicity, race, and religion. Gurin, Patrica. New Research on the Benefits of Diversity in College and Beyond: An Empirical Analysis. http://www.diversityweb.org/Digest/Sp99/benefits.html A racially and ethnically diverse university student body has far-ranging and significant benefits for all students, non-minorities and minorities alike. Students learn better in such an environment and are better prepared to become active participants in our pluralistic, democratic society once they leave school. In fact, patterns of racial segregation and separation historically rooted in our national life can be broken by diversity experiences in higher education. Gurin, Patrica EXPERT REPORT OF PATRICIA GURIN, Gratz, et al. v. Bollinger, et al., No. 97-75321(E.D. Mich.), Grutter, et al. v. Bollinger, et al., No. 97-75928 (E.D. Mich.) http://www.vpcomm.umich.edu/admissions/legal/expert/gurintoc.html Habyarimana, James, Macartan Humphreys, Daniel N. Posner, and Jeremy M. Weinstein, 2007, Why Does Ethnic Diversity Undermine Public Goods Provision? American Political Science Review 101(4)(November): 709-25 A large and growing literature links high levels of ethnic diversity to low levels of public goods provision. Yet although the empirical connection between ethnic heterogeneity and the underprovision of public goods is widely accepted, there is little consensus on the specific mechanisms through which this relationship operates. We identify three families of mechanisms that link diversity to public goods provision--what we term "preferences," "technology," and "strategy selection" mechanisms--and run a series of experimental

games that permit us to compare the explanatory power of distinct mechanisms within each of these three families. Results from games conducted with a random sample of 300 subjects from a slum neighborhood of Kampala, Uganda, suggest that successful public goods provision in homogenous ethnic communities can be attributed to a strategy selection mechanism: in similar settings, co-ethnics play cooperative equilibria, whereas non-co-ethnics do not. In addition, we find evidence for a technology mechanism: coethnics are more closely linked on social networks and thus plausibly better able to support cooperation through the threat of social sanction. We find no evidence for prominent preference mechanisms that emphasize the commonality of tastes within ethnic groups or a greater degree of altruism toward co-ethnics, and only weak evidence for technology mechanisms that focus on the impact of shared ethnicity on the productivity of teams.

Jaynes, Gerald and Frederick McKinney. 2003. Do Blacks Lose When Diversity Replaces Affirmative Action? Review of Black Political Economy 31(12)(Summer-Fall): 111-24. http://www.springerlink.com/content/85375p38j2661283/fulltext.pdf This paper tests the hypothesis that diversity harms the employment opportunities of black Americans through regression analyses of industry level data from the Equal Employment Opportunity Commissions' survey of employers. The results suggest that blacks' employment prospects overall are not affected by the employment of white women or non-black minorities. Moreover, blacks' access to supervisory employment may be enhanced. Jaynes, Gerald D. May 3, 2007. Economic Effects of Contemporary Immigration. Testimony Presented to the Subcommittee on Immigration, Citizenship, Refugees, Border Security, and International Law, U.S. House of Representatives, Committee on the Judiciary, 110th Congress. http://judiciary.house.gov/media/pdfs/Jaynes070503.pdf Madame Chair and members of the committee, my name is Gerald Jaynes and I am Professor in the department of economics and in the department of African American Studies at Yale University. One of my major research interests during the past decade and a half has been immigration and its effects on race and ethnic relations and the economy. It is my pleasure to offer you my thoughts on the economic effects of contemporary immigration in the United States. Today I confine my remarks to the economy focusing on the net benefits and costs of immigration and their distribution across various social groups. Kato, Yuki. 2006. Planning and Social Diversity: Residential Segregation in American New Towns. Urban Studies 43(12)(November): 2285-99. This is a comparative case study of residential segregation in three US 'new towns'. New towns are distinct from older suburban and other master-planned communities in four

regards: larger size, mixed use of land, existence of a master developer and phased planning. The study investigates whether the three new towns, which are considered highly successful in the field of urban planning, have broken the older patterns of racial diversity and residential segregation. Based on 2000 Census data, it is found that these new towns are much less segregated overall than their surrounding metropolitan areas and suburbs, although each community indicates different patterns of racial diversity and integration. By contrasting each community's planning visions and practices with the levels of racial diversity and segregation, the paper explores the contributions of urban planning to residential integration.' Leonard, Jonathan S and David I. Levine. 2006. The Effect of Diversity on Turnover: A Large Case Study. Industrial and Labor Relations Review 59(4)(July): 547-7. http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1245&context=i lrreview Using longitudinal data collected in 1996-98 from over 800 similar workplaces owned and operated by one corporation, the authors examine how workplace diversity and employee isolation along the dimensions of gender, race, and age affected employee turnover. This design controls for much of the variation in job characteristics and labor markets that have confounded other studies of diversity. The authors use the non-linearity of diversity to distinguish its effect from the main effects of demographic groups and from isolation (being in a numerical minority). The study examines how diversity and isolation by race (white, black, Hispanic, Asian), sex, and age affected different groups. The authors find no consistent evidence that diversity itself increased turnover. In contrast, isolation from coworkers and from customers was often associated with higher turnover. Levine, Linda. March 28, 2006. Immigration: The Effects on Native-Born Workers. CRS Report for Congress. Congressional Research Service. http://www.ilw.com/immigdaily/news/2006,0613-crs.pdf The large influx of immigrants in recent decades has led to an equally long, still unresolved debate over its effect on the economic well-being of native-born workers. Specifically, does immigration impose costs on U.S. workers by diminishing their labor market prospects? Economic theory posits that an increase in the supply of labor, such as through immigration, will reduce the wages and employment of native born workers. Studies have utilized two approaches to test the theory. They have produced conflicting results, which have different implications for public policy. Li, Peter. 2001. The Economics of Minority Language Identity. Canadian Ethnic Studies 33(3): 134-154. The debate about whether ethnic identity helps or hinders social mobility is inconclusive because of differences in conceptualizing and measuring "ethnic identity." This paper examines how minority language, as one dimension of ethnic minority identity, changes, and what market returns it brings. Using the 1996 census microdata, the study finds

substantial variations of non-official mother tongues and home languages, especially among foreign-born Canadians. By and large, non-official home languages and mother tongues produce net market penalties, whereas English mother tongue or home language yields positive net returns for men and women. The market disincentives associated with non-official languages and the incentives associated with English mother tongue or home language probably explain why minority languages decline in Canada in favour of English language. Despite the findings, the debate regarding ethnic identity and social mobility cannot be resolved without further examining the multi-dimensions of ethnic identity and how each influences economic outcomes. Lian, Brad and John R. Oneal. 1997. Cultural Diversity and Economic Development: A Cross-National Study of 98 Countries, 1960-1985. Economic Development and Cultural Change 46(1)(Oct.): 61-77. Investigates the significance of cultural diversity -- ie, a nation's ethnic, religious, & linguistic composition -- on economic development, drawing on secondary data measuring the 1960-1985 growth of 98 nations' gross domestic product per capita indicators of political stability, & political fragmentation. Findings indicate that cultural diversity did not significantly influence the rate of economic development, produce political destabilization, & increase political fragmentation. It is concluded that minority populations need not assimilate to dominant cultural norms to accelerate economic performance. Macpherson, David A. and G. Stacy Sirmans. 2001. Neighborhood Diversity and House-Price Appreciation. Journal of Real Estate Finance and Economics 22(1)(January): 81-97. This study examines changes in house prices relative to the level of and change in percent racial/ethnic composition for certain counties in Tampa and Orlando, Florida. Repeatsales transactions between 1971 and 1997 are used to create a constant quality price index for each city. The index for Tampa shows that the average annual house price appreciation was 5.89 percent over the period 1970 through 1997. The index for Orlando shows that the average annual house price appreciation was 5.25 percent over the 1970 through 1997 period. When the Tampa index model is expanded to account for race/ethnicity, household factors, and economic factors, the level of African American population has no significant effect on house-price appreciation; however, the change in percent African American has a negative effect. The level of percent Hispanic population has a positive effect, and the change in percent Hispanic has a positive effect. The expanded Orlando model shows that the level of percent African American population has no significant effect on price appreciation, while the change in percent African American has a negative effect. The level of Hispanic population has a positive effect, while the change in percent in Hispanic has a negative effect. Miller, Joanne. 1995. The Business Case for Diversity. Journal of Education for Business 71(1):7-10.

10

Montalvo, Jose G and Marta Reynal-Querol. 2005. Ethnic Diversity and Economic Development. Journal of Development Economics 76(2)(April): 293-323. This paper analyzes the role that different indices and dimensions of ethnicity play in the process of economic development. Firstly, we discuss the advantages and disadvantages of alternative data sources for the construction of indices of religious and ethnic heterogeneity. Secondly, we compare the index of fractionalization and the index of polarization. We argue that an index of the family of discrete polarization measures is the adequate indicator to measure potential conflict. We find that ethnic (religious) polarization has a large and negative effect on economic development through the reduction of investment and the increase of government consumption and the probability of a civil conflict. Okediji, Tade O. 2005. The Dynamics of Ethnic Fragmentation: A Proposal for an Expanded Measurement Index. American Journal of Economics and Sociology 64(2)(April): 637-62. This paper identifies problems associated with the current empirical measurement of ethnic diversity in economic development literature. An expanded index of ethnic diversity is proposed to include variables such as religion and race, and the results are compared to the prevailing index utilized in empirical literature. The mean of the proposed index is significantly larger and the standard deviation is significantly smaller than that of the prevailing index. This would suggest that disparities in ethnic diversity among countries are not as wide as previously assumed. Further, these results confirm that a comprehensive and more accurate measure of ethnic diversity requires more than a linguistic measurement, which is the primary factor utilized in the prevailing index. Posner, Daniel N. 2004. Measuring Ethnic Fractionalization in Africa. American Journal of Political Science 48(Oct.): 849-863. http://www.jstor.org/stable/1519937 In most studies of the impact of ethnic diversity on economic growth, diversity is hypothesized to affect growth through its effect on macroeconomic policies. This article shows that most measures of ethnic diversity (including the commonly used ELF measure) are inappropriate for testing this hypothesis. This is because they are constructed from enumerations of ethnic groups that include all of the ethnographically distinct groups in a country irrespective of whether or not they engage in the political competition whose effects on macroeconomic policymaking are being tested. I present a new index of ethnic fractionalization based on an accounting of politically relevant ethnic groups in 42 African countries. I employ this measure (called PREG, foroliticallyelevantthnicroups) to replicate Easterly and Levine's influential article on Africa'sgrowth tragedy. I find that PREG does a much better job of accounting for the policy-mediated effects of ethnic diversity on economic growth in Africa than does ELF.

11

Ram, Monder and David Smallbone. 2003. Supplier Diversity Initiatives and the Diversification of Ethnic Minority Businesses in the UK. Policy Studies 24(4)(December): 187-204. This paper examines the role that supplier diversity initiatives can play in opening up market opportunities for ethnic minority businesses (EMBs). EMBs have long been encouraged to diversify from inauspicious "low value" niches; for some, the prospect of contracts with public and private sector organisations could serve as a means of facilitating this process. The advent of the Race Relations Amendment Act provides a legislative stimulus for diversity in public sector procurement. The "corporate social responsibility" agenda, ostensibly embraced by many leading firms, provides a further impetus to re-assess diversity issues in respect of procurement. Case studies of two types of supplier diversity initiatives are drawn upon to inform this assessment: purchaser initiatives, from both the public and private sector; and intermediary or business-tobusiness brokerage type initiatives that attempt to facilitate the access of EMBs to potential contract opportunities. It is clear that such initiatives are at an early stage of development, and have to operate within legislative and political constraints. Nonetheless, there is still scope for the development of progressive measures; this is explored in the conclusion. Salins, Peter. 1991. In Living Colors. New Republic 204(3): 14-15. Examines New York City's ethnic profile. Influx of immigrants and in-migration of Americans from other places; Integration of immigrants into the city's economic life; Diversity of the city's minorities; Rapid growth of the Asian population; Transformation and revival of Queens and other deteriorating neighborhoods by Asians and Caribbean Hispanics; Tensions in the ethnic chaos. Seigel, David J. 2005. The Business Case for Diversity and its Role in the Academy. Diverse: Issues in Higher Education 22(17): 41. Taylor, Christine. 1995. Building a Business Case for Diversity. Canadian Business Reviee 22(1): 12-15. Terenzini, Patrick T. Alberto R. Cabrera, Carol L. Colbeck, Stefani A. Bjorklund and John M. Parente. 2001. Racial and Ethnic Diversity in the Classroom: Does it Promote Student Learning? The Journal of Higher Education 72(5)(Sept.-Oct.): 509-531. http://www.jstor.org/stable/2672879 Defendants of affirmative action are asked to demonstrate that race-sensitive admissions policies and diversity produce educational benefits for all students. This study indicates that the racial/ethnic composition of a classroom may indeed be related to the development of students' problem-solving and group skills. The nature of that effect, however, may be curvilinear.

12

Weitzman, Martin L. 1992. "On Diversity." Quarterly Journal of Economics 107(2): 363405. http://www.jstor.org/stable/2118476 An oft-repeated goal in many contexts is the "preservation of diversity." But what is the diversity function to be optimized? This paper shows how a reasonable measure of the "value of diversity" of a collection of objects can be recursively generated from more fundamental information about the dissimilarity-distance between any pair of objects in the set. The diversity function is shown to satisfy a basic dynamic programming equation, which in a well-defined sense generates an optimal classification scheme. A surprisingly rich theory of diversity emerges, having ramifications for several disciplines. Implications and applications are discussed. Wilson, Franklin D. and Gerald D. Jaynes. 2000. Migration and the Employment and Wages of Native and Immigrant Workers, Work and Occupations 27(2)(May): http://www.irp.wisc.edu/publications/dps/pdfs/dp119699.pdf This paper assesses the association between migration (both international and internal) and the employment status and earnings of young noncollege-educated native white, black, Hispanic, Asian, and immigrant white-collar and blue-collar workers in the United States during the decade from 1980 to 1990. We seek to determine (1) whether internal and/or international migration contributed to the increased joblessness observed for blacks, Asians, and Hispanics in the 1980s, particularly among males, and (2) whether migration contributed to the decline in the hourly wages of both native and immigrant workers in the 1980s. We present results which only partly support the claim that internal migrants and immigrants are substitutes for native workers. On the one hand, we find that migration (flow) was not a major factor associated with the increased joblessness and decreased wages experienced by some native groups during the 1980s, particularly among blue-collar workers. On the other hand, we do find that changes in the foreignborn composition of an industrial sector (a measure of immigrant stock) were associated with increased joblessness of native workers and decreased joblessness of immigrant workers. Wydick, Bruce. 2002. Affirmative Action in College Admissions: Examining Labor Market Effects of Four Alternative Policies. Contemporary Economic Policy 20(1)(January): 12-24. A rancorous debate continues to rage over the use of affirmative action policies in college admissions. This article uses a simple signaling model to evaluate the labor market impacts of four types of affirmative action admissions policies. Race-based preferential policies and policies guaranteeing admission based on high school academic rank may induce discrimination in labor markets when there exists strong heterogeneity in socioeconomic disadvantage within the underrepresented minority group. Under such conditions, it may also be difficult to realize ethnic diversity with disadvantage-based preferential policies. The article argues instead for affirmative action policies emphasizing intensive college preparation for targeted groups.

13