Migration and innovation: Does cultural diversity matter for regional R&D activity?

Recent theoretical research deals with economic costs and benefits of cultural diversity related to immigration. However, empirical evidence regarding the impact of cultural diversity on economic performance is still scarce. We analyse the effect of cultural diversity of the labour force on patent applications for a cross-section of German regions. The results suggest that differences in knowledge and capabilities of workers from diverse cultural backgrounds enhance performance of regional R&D sectors. As regards innovation, the benefits of diversity seem to outweigh the costs caused, for example, by communication barriers. [ABSTRACT FROM AUTHOR]