Linguistic diversity and workplace productivity

•We study the importance of linguistic diversity for workplace productivity.•We apply a new measure of diversity to linked employer-employee data.•We find a negative effect that declines with immigrants' time of arrival. We study the importance of linguistic diversity in the workplace for workp...

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Bibliographic Details
Published in:Labour economics 2020-06, Vol.64, p.101813, Article 101813
Main Authors: Dale-Olsen, Harald, Finseraas, Henning
Format: Article
Language:English
Subjects:
Diversity
GMM
Language diversity
Productivity
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Summary:•We study the importance of linguistic diversity for workplace productivity.•We apply a new measure of diversity to linked employer-employee data.•We find a negative effect that declines with immigrants' time of arrival. We study the importance of linguistic diversity in the workplace for workplace productivity. While cultural diversity might improve productivity through new ideas and innovation, linguistic diversity might increase communication costs and thereby reduce productivity. We apply a new measure of languages’ linguistic proximity to Norwegian linked employer-employee manufacturing data from 2003–12, and find that higher workforce linguistic diversity decreases productivity. We find a negative effect also when we control for the impact of cultural diversity. The detrimental impact disappears over time as immigrant workers’ expected proficiency in Norwegian improves since their time of arrival.
ISSN:0927-5371
1879-1034
DOI:10.1016/j.labeco.2020.101813