Abstract

An individual-level analysis will focus on the ways in which the human-cultural capital of immigrants impacts on their labour market integration. Within the framework of the human capital approach, the analysis will first enquire into the extent to which observable earnings inequalities between different immigrant groups and the native population in Germany are attributable to unequal distributions of productivity relevant characteristics among these groups. Second, we shall explore the dynamics of job matching, associated with enhanced transferability of and returns to imported skills, with a specific emphasis on ethnicity effects. Third, our analysis will explore what available micro-evidence suggests about the factors determining immigrants' engagement in entrepreneurial activities, and compare the effects of self-employment for immigrants and natives.
A regional-level analysis will centre on the question of whether a culturally diversified economy is more efficient than a homogenous one. More precisely, we shall investigate how the clustering of different ethnic groups affects aggregate productivity, innovation and growth in host regions. Gains from a clustering of different ethnic groups may arise from complementarities between different ideas, skills and services associated with immigrant diversity, whereas negative effects of diversity may be derived on the assumption that heterogeneity hampers the exchange of goods, services and knowledge. There is a trade-off between costs related to impediments to interaction in multicultural neighbourhoods, and the benefits of cultural diversity. Given this theoretical ambiguity, comprehensive empirical analyses are required to supply clear-cut conclusions on the relationship between diversity and economic performance.