Institut d’Etudes Politiques de Paris
ECOLE DOCTORALE DE SCIENCES PO
Programme doctoral en économie
Département d’économie de Sciences Po
Doctorat en Sciences économiques
Birds of a feather cannot always flock together.
Essays on the socio-economic impacts of local diversity.
Camille HÉMET
Thèse dirigée par
Yann Algan, Professeur des Universités, IEP de Paris
Soutenue à Paris le 20 novembre 2013
Jury:
M. Yann Algan
Professeur des Universités, IEP de Paris
M. Bruno Decreuse
Professeur des Universités, Université d’Aix-Marseille, Rapporteur
M. Alan Manning
Professor of Economics, London School of Economics and Political Science
M. Thierry Mayer
Professeur des Universités, IEP de Paris
M. Yves Zenou
Professor of Economics, Stockholm University, Rapporteur
Summary
Diversity reflects the extent to which members of a given community share different characteristics, usually pertaining to ethnicity, socio-economic status or even culture. As a result
of trade development and economic integration, modern societies have to cope with increasing
levels of diversity, both in terms of origins and social statuses. The purpose of this dissertation is to assess the social and economic impacts of local diversity. More specifically, the
primary question of this thesis is the following: do individuals in more diverse neighborhoods
fare better or worse than individuals in less diverse neighborhoods? Answering it leads me
to deal with two secondary but not less important matters: understanding the mechanisms
driving the relationship between diversity and the various outcomes considered, and addressing the endogeneity issue. This work thus contributes to the existing literature in three ways:
it examines unexplored issues at a very local level, gives new insights about the underlying
mechanisms and provides new methods to address the endogeneity issue.
The first chapter is entitled The Social Effects of Ethnic Diversity at the Local Level:
A Natural Experiment with Exogenous Residential Allocation.1 It demonstrates the effects
of ethnic diversity on social relationships and the quality of public spaces at a very finite
neighborhood level. We use detailed block level data on diversity and housing quality from a
representative survey on housing in France. We show how and to what extent diversity within
a neighborhood can directly affect household well-being and the quality of the common spaces,
whereas the previous literature looks at more aggregate outcomes through voting channels.
Our identification strategy relies on the exogeneity of public housing allocations with respect
to ethnic characteristics in France, to address the bias due to endogenous residential sorting.
Diversity is shown to have a negative effect on the quality of local public goods, either due to
vandalism, not deterred by other-regarding preferences and social policing, or due to collective
action failure to ensure effective property management. However, we find that diversity has no
robust effect on public safety at a local level and, if anything, is more related to social anomie.
The title of the second chapter is self-explanatory: The Local Determinants of Victimization. This chapter explores the determinants of victimization at the neighborhood level,
using data from the French victimization survey. Its contribution to the economics of crime
literature is threefold. First, I provide evidence that neighborhood characteristics explain
victimization better than individual characteristics. Second, I find that local unemployment
rate is one of the most important factor explaining victimization, with a particularly large ef1
This chapter is co-authored with Yann Algan and David Laitin
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fect on small crimes such as motorbike theft or vandalism. To tackle the endogenous location
selection issue, I adopt an exisiting identification strategy, which is based on the fact that
the study is conducted at a very low geographic level. Third, I take advantage of the precise
localization of the data to adopt a spatial approach, comparing the effect of unemployment
rate in the reference neighborhood and in adjacent neighborhoods. The results support the
idea that criminals are mobile across neighborhoods for more serious economic crimes, in line
with the Beckerian theory of crime, but that petty crimes and vandalism do not involve any
mobility, relating to the social disorganization theory.
The third chapter, Diversity and Employment Prospects: Do Neighbors Matter? aims at
determining whether and how the level of origins’ diversity of a community affects its members’ employment prospects. Relying on detailed data from the French Labor Force Survey,
I measure diversity at two geographic levels: the neighborhood and the local labor market.
The correlation between diversity and employment varies accordingly: it is negative at the
former level but positive at the latter level. I then tackle the endogenous location selection
issue in two ways. First, regarding neighborhood diversity, I adopt an exisiting identification
strategy, which takes advantage of the very precise localization of the data. The negative
effect of diversity on employment at the neighborhood level is reinforced. Second, I rely on a
more standard instrumental variable approach to deal with diversity at the local labor market
level. After correcting for endogeneity, the positive effect of diversity at this level is driven
down to zero, revealing that it was mostly due to self-selection. I also show that diversity
in terms of nationalities (a proxy for cultural diversity) matters more than diversity based
on parents’ origins (a proxy for ethnic diversity). These results reveal that local diversity
may act as a barrier to communication, preventing job information transmission, and hence
reducing employment prospects.
The last chapter, entitled Ethnic Networks and the Informal Labor Market, differs from the
previous ones in that it is theoretical. It develops a dynamic model in which agents belonging
to two different groups (majority versus minority) form a network through which they can
exchange information about formal or informal job offers. The network plays a central role:
both formal and informal job opportunities can only be obtained through word of mouth
communication. This network features homophily, so that information circulates imperfectly
across groups. This model reveals that workers from the minority face adverse employment
conditions on the formal labor market (here due to the reduced size of their network) so that
they use undeclared work as an economic safety net. It also shows that lowering informal
employment can be achieved through weakening homophily and intensifying the audit rate,
although the latter is costly in terms of unemployment.
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