The standard result in the econometric literature on social diversity is that it leads to lower levels of trust in the community and lower provision of public goods. The experiment below confirms the former result in the short run, but not in the long run. This conforms with my own observation that populations - New York, Melbourne come to mind - can become very proud of their multicultural fabric, and the excitement it brings to life. My favourite interpretation of Australian post war immigration is the Philip Adams interpretation. "We started letting migrants in and found that it was a lot of fun".

Social identity, group composition and public good provision: an experimental study Date: 2010-06-07 By: Chakravarty, Surajeet Fonseca, Miguel A. URL: http://d.repec.org/n?u=RePEc:pra:mprapa:23115&r=exp

Social fragmentation has been identified as a potential cause for the under-provision of public goods in developing nations, as well as in urban communities in developed countries such as the U.S. We study the effect of social fragmentation on public good provision using laboratory experiments. We create two artificial social groups in the lab and we assign subjects belonging to both groups to a public good game. The treatment variable is the relative size of each social group, which is a proxy for social fragmentation. We find that while higher social fragmentation leads to lower public good provision, this effect is short-lived. Furthermore, social homogeneity does not lead to higher levels of contributions. Keywords: Social Identity; Public Goods; Social Fragmentation; Experiments. JEL: C92