Population diversity and economic growth

Population diversity has a theoretically ambiguous effect on economic growth. On the one hand, having a more diverse population makes it more difficult for people to agree on things like spending on public goods (e.g. see this post), it can open the door to policies that favour certain ethnic groups, and lead to conflict over resources and the management of public services. On the other hand, having a more diverse population brings people together with different (and complementary) skills, experiences, and ways of thinking, which can boost innovation and productivity, as well as fostering connections with different communities (and other countries), which may increase international trade and investment.

Many studies have tested the relationship between population diversity and economic growth, with little consensus. That makes the literature ripe for meta-analysis, where the results of many studies are combined in order to estimate an overall relationship. That is the approach in this new article by Andreas Sintos (University of Luxembourg), published in the Journal of Economic Surveys (open access). Sintos collates the results from 83 studies, with 1537 estimates of the relationship between some measure of population diversity and some measure of economic growth.

First, Sintos establishes that there is a small publication bias overall, with studies that find a negative relationship between diversity and growth being more likely to be published than would be expected given the overall distribution of results. Then, after adjusting for publication bias and methodological quality of the studies, he finds that:

...while ethnic and linguistic diversity demonstrates a small and statistically insignificant positive effect on economic growth, the remaining dimensions of diversity—religious, genetic, birthplace, and the residual category—demonstrate a significant positive impact on economic growth, with effect sizes spanning from moderate to large.

So, population diversity (specifically religious, genetic, and birthplace diversity, as well as a residual category that captures other forms of diversity) is positively associated with economic growth. Places that have more diversity of those types (but not places that have more ethnic or linguistic diversity) grow faster. A 'moderate to large' effect here means that each standard deviation higher diversity is associated with 0.1 to 0.4 standard deviations higher economic growth. That is not to be sneezed at.

What Sintos isn't able to do, though, is explore the mechanisms that underlie that positive relationship. So, while meta-analysis can give us an overall estimate of the relationship, it can't tell us why that relationship exists. To do that, we would need to go and look at the individual studies, particularly those that found a positive relationship between diversity and growth, and see if they explored the mechanisms.

Finally, this article made me chuckle, as it is clear that substantial portions of it were written by generative AI. No human uses the word "elucidate" 14 times in a research paper, and quantitative papers rarely refer to the "scholarly discourse". I should really have been alerted to this when the first paragraph included the LLM-ese sentence: "The significance of population diversity within the economic sphere is multifaceted". Perhaps diversity's significance is multifaceted. This article doesn't tell us that though. All it tells us is that the relationship between diversity (by some measures) and economic growth is positive. More diverse places tend to grow faster.