The Effects of Cultural and Educational Diversity on Wages in the US Labour Market

This research focuses on the effects of migrants’ cultural and educational diversity on the wages of US-born workers in the US during the period 2010 to 2015 at state level. Several key results emerge. Firstly, migrants’ cultural diversity does not necessarily imply skill diversity in the US labour market. Secondly, the relationship between cultural diversity and wages is positive but only at lower levels of cultural diversity. The effects of migrants’ cultural diversity on the wages of US-born workers is positive and strong for the group of middle-aged and highly-educated workers. Cultural diversity boosts wages of native around 16%, on average. However, at very high levels of cultural diversity, the benefit of cultural diversity on native wages is diminished. By contrast, the relationship between educational diversity and wages is strong and positive. For example, if educational diversity increases by one standard deviation, the wages of native workers increase by around 6% and this effect is stronger for the middle-aged and the lower educated. Also, we find little evidence of diminishing returns of educational diversity on native wages.