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The Effect of Diversity on Wellbeing -- Work in Progress -- Simonetta Longhi Institute for Social and Economic Research University of Essex Part of the.

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Presentation on theme: "The Effect of Diversity on Wellbeing -- Work in Progress -- Simonetta Longhi Institute for Social and Economic Research University of Essex Part of the."— Presentation transcript:

1 The Effect of Diversity on Wellbeing -- Work in Progress -- Simonetta Longhi Institute for Social and Economic Research University of Essex Part of the project Migrant Diversity and Regional Disparity in Europe. Financial support from NORFACE research programme on Migration in Europe - Social, Economic, Cultural and Policy Dynamics is acknowledged

2 Most governments nowadays recognise the importance of subjective measures of wellbeing for policy Important to be able to identify whether the characteristics of the area where the person lives (e.g. cultural diversity) have an impact on wellbeing This paper brings together two strands of literature: subjective wellbeing and impact of diversity Motivation

3 Subjective wellbeing is often measured by answers to questions on individual life satisfaction Literature on satisfaction has mostly focused on the role of individual characteristics (gender, age, employment status) and individual life event (divorce, unemployment) More recent studies analyse the impact of the quality of the local area (neighbourhood deprivation) Contribution: is there an impact of cultural diversity on satisfaction? Subjective Wellbeing

4 Culturally diverse people may have different problem- solving abilities, which may increase productivity and lead to higher wages A diverse local community may enjoy a larger variety of services such as (ethnic) shops and restaurants Cultural differences or a poor understanding of the common language may create misunderstandings, conflicts and uncooperative behaviour Competition for scarce resources among culturally diverse groups may result in racism and social conflicts Contribution: is there an impact of diversity on life satisfaction? Diversity

5 A diverse population is a population with groups with different: Ethnicity, country of birth, religion But also different: Education/qualifications Occupation, Industries … What is Diversity?

6 Theoretical Background U it = f(IC it, NC it ) Utility of person i at time t Individual characteristics (age, education, household and employment situation, … personality) Characteristics of the area where the person lives Measured by questions on life satisfaction Focus of this paper: do people have a taste for diversity?

7 Individual-level longitudinal: panel of UK households, each adult member of the household is interviewed annually Data available: 1991(1996)-2008 Questions on demographics, work, life satisfaction, and more Focus on white British respondents aged 25 or older British Household Panel Survey

8 How dissatisfied or satisfied are you with your life overall? Answers on a 7-point scale: 1. not satisfied at all 2. 3. 4. not satisfied nor dissatisfied 5. 6. 7. completely satisfied Acceptable measure of utility Measuring Utility

9 UK Quarterly Labour Force Survey (LFS) Individual-level dataset focusing on employment and labour market activities of respondents; covers the whole UK Large sample size; population representative weights Used to compute aggregate measures More information than census; higher frequency Two versions: ordinary and special licence Aggregate Data

10 Used to compute area aggregates at the county level (87 in England): unemployment rate median wages proportion population with a degree measures of diversity Covers the whole of the UK, but need to focus on the largest counties (only 29 have always more than 1,000 observations; all are in England) Data available: 2003-2007 Special License LFS

11 Used to compute area aggregates at the regional (only 19 regions in Great Britain): unemployment rate median wages proportion population with a degree measures of diversity Can analyse all UK Data available: 1992-2011 Ordinary LFS

12 Index of fractionalisation (0-1) Higher fractionalisation More diversity Group = size of (ethnic, religious, …) subgroup Population = total population (sum of all subgroups) Measures of diversity: ethnicity, country of birth, religion, education, occupation, industry Measures of Diversity

13 Impact of area characteristics on individual wellbeing: Satisfaction = f(individual characteristics) Satisfaction = f(individual characteristics + area characteristics) For simplicity assume cardinality (OLS) with FEs (to account for omitted variable bias) Modelling Strategy

14 Ethnic Diversity GeographyYearNMinMedianMax Counties2003290.0350.0950.618 Counties2007290.0600.1840.673 Regions1996170.0410.0990.525 Regions2008180.0790.1960.687

15 Diversity by Country of Birth GeographyYearNMinMedianMax Counties2003290.0200.0490.291 Counties2007290.0270.0730.337 Regions1996180.0150.0300.222 Regions2008180.0460.0840.354

16 Religious Diversity GeographyYearNMinMedianMax Counties2003290.1880.2660.512 Counties2007290.2530.3410.582 Regions2002170.1820.2690.492 Regions2008170.2430.3800.586

17 Diversity in Education GeographyYearNMinMedianMax Counties2003290.8060.8130.820 Counties2007290.7980.8120.820 Regions1996180.7890.8080.821 Regions2008180.8030.8170.820 No variation across areas or over time

18 Occupational Diversity GeographyYearNMinMedianMax Counties2003290.8660.8820.886 Counties2007290.8540.8800.887 Regions1996180.8710.8820.885 Regions2008180.8650.8830.886 No variation across areas or over time

19 Industrial Diversity GeographyYearNMinMedianMax Counties2003290.004 Counties2007290.004 Regions1996180.004 Regions2008180.004 No variation across areas or over time

20 CountiesRegions Age-0.0020.003 Age square-0.000-0.000** Married0.293**0.284** Children0.065-0.028* Annual income (1,000)0.000-0.000 Employed0.119**0.172** Self-employed0.125*0.168** Unemployed-0.148**-0.116** Retired (ref: other inactive)0.187**0.230** Intercept5.496**5.160** Observations20,491133,849 Period2003-20071996-2008 Individual Characteristics Only * Significant at 5%, ** Significant at 1%

21 CountiesRegions Age-0.0020.003 Age square-0.000-0.000** Married0.293**0.284** Children0.065-0.028* Annual income (1,000)0.000-0.000 Employed0.119**0.172** Self-employed0.125*0.168** Unemployed-0.148**-0.116** Retired (ref: other inactive)0.187**0.230** Intercept5.496**5.160** Observations20,491133,849 Period2003-20071996-2008 Individual Characteristics Only The coefficients do not change when we include (aggregate) measures of the characteristics of the area * Significant at 5%, ** Significant at 1%

22 CountiesRegions Ethnic diversity0.1410.0580.0960.116-0.287 Div. birth-0.258-0.0930.0050.0931.069* Religious div.-0.560*-0.547*-0.191 Div. education0.1071.863 Occupational div.2.9834.775 Industrial div.170.758205.872** Unemploy. rate0.0230.027*0.0050.0020.000 Median wages-0.103**-0.107**-0.000-0.001*-0.001 % with degree0.023**0.021**0.0050.0040.000 Intercept1.3984.834**-1.6844.931**4.972** Observations20,491 133,849 70,367 Period2003-2007 1996-2008 2002-2008 Characteristics of the Area Also includes individual characteristics * Significant at 5%, ** Significant at 1%

23 CountiesRegions Ethnic diversity0.1410.0580.0960.116-0.287 Div. birth-0.258-0.0930.0050.0931.069* Religious div.-0.560*-0.547*-0.191 Div. education0.1071.863 Occupational div.2.9834.775 Industrial div.170.758205.872** Unemploy. rate0.0230.027*0.0050.0020.000 Median wages-0.103**-0.107**-0.000-0.001*-0.001 % with degree0.023**0.021**0.0050.0040.000 Intercept1.3984.834**-1.6844.931**4.972** Observations20,491 133,849 70,367 Period2003-2007 1996-2008 2002-2008 Characteristics of the Area Also includes individual characteristics * Significant at 5%, ** Significant at 1%

24 CountiesRegions Ethnic diversity0.1410.0580.0960.116-0.287 Div. birth-0.258-0.0930.0050.0931.069* Religious div.-0.560*-0.547*-0.191 Div. education0.1071.863 Occupational div.2.9834.775 Industrial div.170.758205.872** Unemploy. rate0.0230.027*0.0050.0020.000 Median wages-0.103**-0.107**-0.000-0.001*-0.001 % with degree0.023**0.021**0.0050.0040.000 Intercept1.3984.834**-1.6844.931**4.972** Observations20,491 133,849 70,367 Period2003-2007 1996-2008 2002-2008 Characteristics of the Area Also includes individual characteristics * Significant at 5%, ** Significant at 1%

25 Preliminary Conclusions Diversity does not seem to have a relevant impact on wellbeing, with the exception of religious diversity Higher religious diversity may lead to lower levels of wellbeing in the population Other area characteristics do have an impact Next Steps Endogeneity maybe not a problem here? Add further aggregate measures? (crime, air quality… if available) Exclude those who move across areas


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