@TechReport{iza:izadps:dp6973, author={Parrotta, Pierpaolo and Pozzoli, Dario and Pytlikova, Mariola}, title={Does Labor Diversity Affect Firm Productivity?}, year={2012}, month={Oct}, institution={Institute of Labor Economics (IZA)}, address={Bonn}, type={IZA Discussion Paper}, number={6973}, url={https://www.iza.org/index.php/publications/dp6973}, abstract={Using a matched employer-employee data-set, we analyze how workforce diversity in terms of cultural background, education and demographic characteristics affects the productivity of firms in Denmark. Implementing a structural estimation of the firms' production function (Ackerberg et al. 2006), we find that labor diversity in education significantly enhances a firm's value added. Conversely, diversity in ethnicity and demographics induces negative effects on firm productivity. Therefore, the negative effects, which are derived from the communication and integration costs associated with a more culturally and demographically diverse workforce, seem to outweigh the positive effects of creativity and knowledge spillovers.}, keywords={communication barriers;total factor productivity;skill complementarity;labor diversity}, }