Cultural diversity and economic growth: Evidence from the US during the age of mass migration

•Examine the effects of cultural diversity on economic growth in the US.•Exploit the large inflow of immigrants to the US during the 1870-1920 period.•Increases in cultural fractionalization significantly increased output.•Increases in cultural polarization significantly decreased output.•Use the supply-push component of immigrant inflows as an instrumental variable.

We exploit the large inflow of immigrants to the US during the 1870-1920 period to examine the effects that within-county changes in the cultural composition of the US population had on output growth. We construct measures of fractionalization and polarization to distinguish between the different effects of cultural diversity. Our main finding is that increases in cultural fractionalization significantly increased output, while increases in cultural polarization significantly decreased output. We address the issue of identifying the causal effects of cultural diversity by using the supply-push component of immigrant inflows as an instrumental variable.