Immigration and the economic performance of countries

This paper provides cross-country evidence on the relationship between immigration-induced diversity and economic performance, as evaluated by the Economic Fitness metric. To address endogeneity concerns, we use gravity-based predictors of migrant diversity as a source of exogenous variation. We show that migration induces a sizable positive effect on the counties’ Fitness. These findings appear to stem from migrants into middle-income counties. Our results are robust to the use of data from alternative sources, estimation methods, and an extensive set of contemporaneous and historical controls. Importantly, we establish the validity of the results using a time-varying instrument and conventional panel data regressions