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

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The Effect of Diversityon Wellbeing

-- Work in Progress --

SimonettaLonghi

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

motivation
Motivation
  • 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
subjective wellbeing
Subjective Wellbeing
  • 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?

diversity
Diversity
  • 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?

what is diversity
What is Diversity?

A diverse population is a population with groups with different:

  • Ethnicity, country of birth, religion

But also different:

  • Education/qualifications
  • Occupation, Industries
theoretical background
Theoretical Background

Uit = f(ICit, NCit)

Characteristics of the area where the person lives

Utility of person iat time t

Measured by questions on life satisfaction

Focus of this paper:do people have a taste

for diversity?

Individual characteristics (age, education, household and employment situation, … personality)

british household panel survey
British Household Panel Survey
  • 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
measuring utility
Measuring Utility
  • “How dissatisfied or satisfied are you with your life overall?”
  • Answers on a 7-point scale:
    • not satisfied at all
    • not satisfied nor dissatisfied
    • completely satisfied
  • Acceptable measure of utility
aggregate data
Aggregate Data
  • 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
special license lfs
Special License LFS
  • 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
ordinary lfs
“Ordinary” 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
measures of diversity
Measures of Diversity

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
modelling strategy
Modelling Strategy
  • 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)

diversity in education
Diversity in Education

No variation across areas or over time

occupational diversity
Occupational Diversity

No variation across areas or over time

industrial diversity
Industrial Diversity

No variation across areas or over time

individual characteristics only
Individual Characteristics Only

* Significant at 5%, ** Significant at 1%

individual characteristics only1
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%

characteristics of the area
Characteristics of the Area

Also includes individual characteristics

* Significant at 5%, ** Significant at 1%

characteristics of the area1
Characteristics of the Area

Also includes individual characteristics

* Significant at 5%, ** Significant at 1%

characteristics of the area2
Characteristics of the Area

Also includes individual characteristics

* Significant at 5%, ** Significant at 1%

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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