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The Effect of Diversityon Wellbeing
-- Work in Progress --
Simonetta LonghiInstitute for Social and Economic ResearchUniversity 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
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
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
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
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?
Theoretical Background
Uit = f(ICit, NCit)
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 tastefor diversity?
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
“How dissatisfied or satisfied are you with your life overall?”
Answers on a 7-point scale:1. not satisfied at all2. 3. 4. not satisfied nor dissatisfied5. 6. 7. completely satisfied
Acceptable measure of utility
Measuring Utility
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
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
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
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
K
k rt
krtrt Population
GroupF
1
2
1
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
Ethnic Diversity
02
46
De
nsity
0 .2 .4 .6 .8Fractionalisation
2003 2004 2005
2006 2007
Ethnic Diversity - Counties
02
46
De
nsity
0 .2 .4 .6 .8Fractionalisation
1996 1999 2002
2005 2008
Ethnic Diversity - Regions
Geography Year N Min Median MaxCounties 2003 29 0.035 0.095 0.618Counties 2007 29 0.060 0.184 0.673Regions 1996 17 0.041 0.099 0.525Regions 2008 18 0.079 0.196 0.687
Diversity by Country of Birth
Geography Year N Min Median MaxCounties 2003 29 0.020 0.049 0.291Counties 2007 29 0.027 0.073 0.337Regions 1996 18 0.015 0.030 0.222Regions 2008 18 0.046 0.084 0.354
05
10
15
20
De
nsity
0 .1 .2 .3 .4Fractionalisation
2003 2004 2005
2006 2007
Diversity by Country of Birth - Counties
05
10
15
20
De
nsity
0 .1 .2 .3 .4Fractionalisation
1996 1999 2002
2005 2008
Diversity by Country of Birth - Regions
Religious Diversity
02
46
8
De
nsity
.2 .3 .4 .5 .6Fractionalisation
2003 2004 2005
2006 2007
Religious Diversity - Counties
02
46
De
nsity
.2 .3 .4 .5 .6Fractionalisation
2002 2005
2008
Religious Diversity - Regions
Geography Year N Min Median MaxCounties 2003 29 0.188 0.266 0.512Counties 2007 29 0.253 0.341 0.582Regions 2002 17 0.182 0.269 0.492Regions 2008 17 0.243 0.380 0.586
Diversity in Education
02
04
06
08
01
00
De
nsity
.8 .805 .81 .815 .82Fractionalisation
2003 2004 2005
2006 2007
Diversity in Education - Counties
05
01
001
50
De
nsity
.79 .8 .81 .82Fractionalisation
1996 1999 2002
2005 2008
Diversity by Education - Regions
Geography Year N Min Median MaxCounties 2003 29 0.806 0.813 0.820Counties 2007 29 0.798 0.812 0.820Regions 1996 18 0.789 0.808 0.821Regions 2008 18 0.803 0.817 0.820
No variation across areas or over time
Occupational Diversity
02
04
06
08
01
00
De
nsity
.85 .86 .87 .88 .89Fractionalisation
2003 2004 2005
2006 2007
Occupational Diversity - Counties
05
01
001
502
002
50
De
nsity
.865 .87 .875 .88 .885Fractionalisation
1996 1999 2002
2005 2008
Occupational Diversity - Regions
Geography Year N Min Median MaxCounties 2003 29 0.866 0.882 0.886Counties 2007 29 0.854 0.880 0.887Regions 1996 18 0.871 0.882 0.885Regions 2008 18 0.865 0.883 0.886
No variation across areas or over time
Industrial Diversity
01
000
200
03
000
400
0
De
nsity
.0038 .004 .0042 .0044Fractionalisation
2003 2004 2005
2006 2007
Industrial Diversity - Counties
01
000
200
03
000
400
05
000
De
nsity
.0038 .0039 .004 .0041 .0042 .0043Fractionalisation
1996 1999 2002
2005 2008
Industrial Diversity - Regions
Geography Year N Min Median MaxCounties 2003 29 0.004 0.004 0.004Counties 2007 29 0.004 0.004 0.004Regions 1996 18 0.004 0.004 0.004Regions 2008 18 0.004 0.004 0.004
No variation across areas or over time
Counties RegionsAge -0.002 0.003Age square -0.000 -0.000**Married 0.293** 0.284**Children 0.065 -0.028*Annual income (1,000) 0.000 -0.000Employed 0.119** 0.172**Self-employed 0.125* 0.168**Unemployed -0.148** -0.116**Retired (ref: other inactive) 0.187** 0.230**Intercept 5.496** 5.160**
Observations 20,491 133,849Period 2003-2007 1996-2008
Individual Characteristics Only
* Significant at 5%, ** Significant at 1%
Counties RegionsAge -0.002 0.003Age square -0.000 -0.000**Married 0.293** 0.284**Children 0.065 -0.028*Annual income (1,000) 0.000 -0.000Employed 0.119** 0.172**Self-employed 0.125* 0.168**Unemployed -0.148** -0.116**Retired (ref: other inactive) 0.187** 0.230**Intercept 5.496** 5.160**
Observations 20,491 133,849Period 2003-2007 1996-2008
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%
Counties RegionsEthnic diversity 0.141 0.058 0.096 0.116 -0.287Div. birth -0.258 -0.093 0.005 0.093 1.069*Religious div. -0.560* -0.547* -0.191Div. education 0.107 1.863Occupational div. 2.983 4.775Industrial div. 170.758 205.872**Unemploy. rate 0.023 0.027* 0.005 0.002 0.000Median wages -0.103** -0.107** -0.000 -0.001* -0.001% with degree 0.023** 0.021** 0.005 0.004 0.000Intercept 1.398 4.834** -1.684 4.931** 4.972**
Observations 20,491 20,491 133,849 133,849 70,367Period 2003-2007 2003-2007 1996-2008 1996-
20082002-2008
Characteristics of the Area
Also includes individual characteristics * Significant at 5%, ** Significant at 1%
Counties RegionsEthnic diversity 0.141 0.058 0.096 0.116 -0.287Div. birth -0.258 -0.093 0.005 0.093 1.069*Religious div. -0.560* -0.547* -0.191Div. education 0.107 1.863Occupational div. 2.983 4.775Industrial div. 170.758 205.872**Unemploy. rate 0.023 0.027* 0.005 0.002 0.000Median wages -0.103** -0.107** -0.000 -0.001* -0.001% with degree 0.023** 0.021** 0.005 0.004 0.000Intercept 1.398 4.834** -1.684 4.931** 4.972**
Observations 20,491 20,491 133,849 133,849 70,367Period 2003-2007 2003-2007 1996-2008 1996-
20082002-2008
Characteristics of the Area
Also includes individual characteristics * Significant at 5%, ** Significant at 1%
Counties RegionsEthnic diversity 0.141 0.058 0.096 0.116 -0.287Div. birth -0.258 -0.093 0.005 0.093 1.069*Religious div. -0.560* -0.547* -0.191Div. education 0.107 1.863Occupational div. 2.983 4.775Industrial div. 170.758 205.872**Unemploy. rate 0.023 0.027* 0.005 0.002 0.000Median wages -0.103** -0.107** -0.000 -0.001* -0.001% with degree 0.023** 0.021** 0.005 0.004 0.000Intercept 1.398 4.834** -1.684 4.931** 4.972**
Observations 20,491 20,491 133,849 133,849 70,367Period 2003-2007 2003-2007 1996-2008 1996-
20082002-2008
Characteristics of the Area
Also includes individual characteristics * Significant at 5%, ** Significant at 1%
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
