Abstract
ABSTRACT Population shifts resulting from increasing cross-national migration have caused the diversity and its economic effects to become a hotly contested issue in modern societies. Using fractionalization as a proxy for diversity, we ask: what is the effect of fractionalization on subjective well-being (SWB)? Using the fractionalization index created by Alesina et al., we hypothesize that (1) the effect of ethnic, linguistic, and religious fractionalization on SWB is conditional on the size of the welfare state and that (2) decommodifying welfare states will mediate the (potential) negative impact of ethnic heterogeneity, resulting in higher levels of SWB. Ultimately, we find evidence for both of our claims, and conclude by emphasizing the importance of decommodification for both economic growth and SWB.
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