Birds of a feather cannot always flock together : essays on the socio-economic impacts of local diversity.

Summary Diversity reflects the fact that members of a community differ according to certain characteristics, related to ethnic origin, socio-economic status or culture. The rise of trade and economic integration has presented modern societies with increasing levels of diversity. This thesis assesses the social and economic impact of local diversity. It shows how the diversity of a neighborhood affects the living conditions and employment prospects of its residents. This work contributes to the literature in three ways: it examines unexplored issues at a very local level, reveals underlying mechanisms, and provides new methods for addressing endogeneity. Chapter 1 shows that diversity of origins has a negative effect on the quality of local public goods, due to vandalism related to a lack of peer pressure, and due to the failure of collective action that would enable effective property management. No robust effect on public safety is noted. Chapter 2 reveals that the effect of unemployment on crime has a spatial dimension. For economic crime, unemployment in the surrounding neighborhoods has a stronger effect than in the immediate neighborhood, with the reverse being true for vandalism. Chapter 3 shows that people living in a more diverse neighborhood have lower employment prospects, with this effect related more to the cultural than the ethnic dimension of diversity. Chapter 4 develops a model rationalizing ethnic minorities' use of the informal economy in response to unfavorable labor market conditions.