Table of Contents
Social Trust
The overall research suggests that ethnic diversity has negative effects on social trust, based on results from both meta-analytical and experimental data and also a literature review on the subject. However, this varies according to measure, and the evidence suggests the effect is strongest in the context of within-neighborhood interactions (Glaeser et al., 2000; Van Der Meer & Tolsma, 2014; Dinesen et al., 2020). Conversely, there is a positive relationship between co-ethnic concentration and trust in neighbors (Wu et al., 2017). Interestingly, immigrants appear to also adopt levels of social trust consistent with those of native-born citizens, and this effect becomes stronger for second-generation immigrants (Dinesen & Hooghe, 2010; Helliwell et al., 2015). This suggests that ethnic diversity in general reduces social cohesion and immigrants also feel these effects. On an individual level, this effect certainly varies from person to person, as research has found that those who move into a diverse place experience no negative effects on social cohesion while those who are in a community which becomes more diverse do have negative social cohesion effects (Laurence & Bentley, 2015). This is likely due to selection bias of those moving being more likely to be sympathetic towards diverse communities. Ethnic diversity also erodes social capital (Hotchkiss & Rupasingha, 2018), including the probability of volunteering, having a group membership, and the probability of entertaining (Costa & Kahn, 2001).
There are important moderators to this effect, most notably multicultural and economically egalitarian policies (Kesler & Bloemraad, 2010; Van Der Meer & Tolsma, 2014). More contact with out-group members, which is likely related to multicultural policy, is also a notable moderator (Christ et al., 2014; Paluck et al., 2019; Dinesen et al., 2020). Not only can these effects moderate the relationship between ethnic diversity and social cohesion but in some cases they can in fact perhaps reverse it (Reeskens, 2010). Still, the evidence is not completely one-way on whether moderators completely eliminate the effect of ethnic diversity on social cohesion. It appears that ethnicity can exacerbate social problems when coupled with problems such as wealth inequality, which can often occur along racial lines, but it is likely the case that even ethnic diversity alone at least in some contexts can reduce social cohesion. Neal & Neal (2014) argues that there is a tradeoff between the creation of a sense of community and a fostering of respect for diversity within neighborhoods. These effects may not translate from a local context to a cross-national context (Hooghe et al., 2008).
Conflict
There is competing literature on the question of the relationship between ethnic diversity and conflict (Montalvo & Reynal-Querol, 2005; Fish & Kroenig, 2006; Esteban et al., 2012), although it varies by the measurement of diversity used. Ethnic fractionalization, which is the probability that two randomly selected people are from different ethnicities, has lesser negative effects or null effects when compared to ethnic polarization, which is how close ethnic divisions map onto a binary distribution. A related measure is an aggregate measure which takes into account ethnic distribution, effective power, and probability of across group interactions and this positively predicts conflict (Kovacic & Zoli, 2021). In other words, the degree to which one group is in power and the degree to which ethnic exclusion occurs predicts conflict significantly, more so than other measures of ethnic diversity which only look at distribution of ethnicities without reference to relative power. Probably the most robust piece of evidence would be to look at population genetic diversity and how it relates to conflict. Arbatl et al. (2015) found that this predicts conflict across countries as well as within ethnic homelands.
This doesn’t mean that in all contexts ethnic diversity will necessarily promote conflict. In areas where people recognize the need for unification as a product of ethnic differences, ethnic diversity can be the catalyst which brings about peace (Fish & Kroenig, 2006). However, it may be the case that in other areas where this doesn’t occur, it’s arguably better to separate groups through physical and political boundaries to prevent conflict from occurring (Rutherford et al., 2011; Rutherford et al., 2015). Interestingly, however, high residential mobility is another important moderator for this effect. High residential mobility has been found to result in lower levels of out-group hostility (De et al., 2015). In short, it appears that ethnic diversity has an inconsistent but generally negative effect on conflict between groups.
There is also research suggesting that ethnic heterogenety increases crime (Altheimer, 2011; Wenger, 2018).
Altruism
Ethnic diversity appears to be negatively related to altruism as well, with research suggesting that ethnic diversity is associated with lower levels of charitable giving (Andreoni et al., 2011).
Health and Poverty
Ethnic diversity appears to be weakly associated with lower mental health outcomes (Longhi, 2014; Kuroki, 2017; Churchill et al., 2019), and increases in own ethnic density are associated with improvements in mental health (Bécares et al., 2017; Das-Munshi et al., 2018). It should be noted however that this effect varies between individuals of different psychological orientations (Howley et al., 2020). Individuals with low openness and low particularized trust tend to have lower psychological well-being as a result of immigration, which is typically associated with increases in ethnic diversity. On the other hand, immigration increases the psychological well-being of individuals with high openness and high particularized trust.
Ethnic diversity and general health are inversely related to one another (Alvarez & Levy, 2012; Churchill et al., 2017). Additionally, ethnic diversity appears to itself contribute to poverty levels (Churchill & Smyth, 2017).
Economic Effects
Looking at research on overall economic growth, the evidence points to null or negative effects of ethnic diversity on economic growth. This effect is largest in poorer countries with weak institutions and becomes null in rich democracies which have good institutions to be able to manage ethnic diversity (Easterly & Levine, 1997; Alesina et al., 2002; Alesina & Ferrara, 2004). There are some more specific lines of evidence that can be examined. One is how ethnic diversity affects institutions which predict economic growth, such as public goods provision (Poterba, 1996), as well as other institutions which are generally positive but may not predict economic growth such as environmental protection (Papyrakis, 2012). Ethnic diversity also appears to have a negative effect on the provision of public goods.
Much of the literature on ethnic diversity and its effects in workplaces, however, is more sympathetic to diversity as a means to improve economic performance. It is conceivable from the outset that while diversity has negative effects or null effects on economic growth as a whole, there could be channels which operate either way to sway that value. Firm productivity could swing it positively, for example. Some research has suggested that ethnic diversity is positive for worker productivity and innovation (Spoonley, 2014; Hunt et al., 2015; Galinsky et al., 2015; Henderson et al., 2017; Lorenzo et al., 2018). Additional research has suggested that racial diversity congruence with the general population has positive effects on firm productivity (Richard et al., 2015).
However, research which disaggregates ethnic diversity from associated factors which affect firm productivity, such as viewpoint diversity and diversity in education suggests that this isn’t itself due to racial diversity per se but rather due to cultural differences that may themselves be correlated with racial diversity (Parrotta et al., 2012; Ramasamy & Yeung, 2016; Makkonen, 2022). In fact, when accounting for this, racial diversity has a negative impact on firm productivity and innovation. Further evidence for this hypothesis is how assimilation or integration, which attempts to erase cultural differences between ethnic groups, appears to reduce the productivity externalities derived from immigrant diversity, due to increased levels of cultural proximity (Haus-Reve et al., 2021).
Research however which bases its conclusions on the personal experiences of employees paints a different picture, suggesting that ethnic diversity does positively affect performance (Deloitte, 2013; Smith et al., 2015; Yello, n.d.). It’s possible that this could result in some workplaces performing better when thet are diverse, merely because people believe that ethnic diversity increases productivity. What I think is more important in explaining this, however, is that people don’t consider diversity to be positive because different ethnic groups are being brought together per se, but because of viewpoint diversity and educartional diversity which may occur along ethnic lines. Still, there could be a degree of a placebo effect. It should be noted that diversity and inclusion initiatives aren’t simply about representation but can also be associated with anti-discrimination initiatives which improve employee retention. This can result in diversity initiatives having positive effects on productivity (Scott et al., 2017). Given that these initiatives likely predict in many circumstances the level of ethnic diversity within firms, it is possible that this can also explain some positive overall associations between ethnic diversity and firm performance.
Schooling
Moving from a homogenous school district to one in which two racial groups have equal population shares is associated with lower school performance, holding educational spending constant (Hall & Leeson, 2010). Ethnic diversity also appears to increase the probability of classroom disruption in schools, although in countries with a more inclusive migration policy students are at least less harmed by the ethnic diversity effect (Veerman, 2014).
Ethnocentrism
Ethnocentrism appears to have arisen through biological evolution. It dominates over humanitarian strategies through exploitation and dominates over selfish strategies because it doesn’t induce sufficient cooperation with like agents (Hartshorn et al., 2013). Experimental psychological research suggests that ingroup favoritism is not necessarily linked with outgroup hostility. Ethnocentrism and xenophobia appear to be uncorrelated with one another (Cashdan, 2001).