Inherited cultural diversity and wages: surname-based evidence.

This article investigates the impact of inherited cultural diversity on local wage levels in Rio Grande do Sul, Brazil, using administrative panel data from 2008 to 2013 and machine learning to infer workers' ancestry from surnames. The study distinguishes inherited diversity from birthplace diversity by exploiting the exogenous location of 19th- and early 20th-century state-sponsored immigrant colonies (German, Italian, and mixed) as instrumental variables. Results show that higher inherited cultural diversity generates a positive wage externality of about 3.5–4 percent, robust to controls for human capital, institutions, geography, trade, and worker sorting. The authors suggest that knowledge spillovers and facilitated problem-solving arising from diverse cultural backgrounds are the most plausible mechanisms behind this effect, highlighting the long-term economic value of cultural diversity beyond immediate immigration inflows.