Diversity in Motion: The Role of Immigrant Human Capital in Danish Second-Tier Towns and Rural Areas

This study explores the impact of diversified human capital (HC) among inter-regional immigrants on local economies in Denmark, using data from 2009 to 2020. It introduces a Regional Entropy Index (REI) model to measure HC diversification, including education, age, socioeconomic status, sector, wage level, and occupation. Findings show that the effects of diversified HC on wages differ between urban and rural areas. Both benefit from diverse age and wage levels, but the impact of education and occupation diversity varies. Rural areas gain more from diverse age, wage, and occupation levels, while urban areas benefit from diversity in age, wage, and education. The study highlights significant spillover effects, with stronger impacts on urban and neighbouring areas. Proximity to urban centres enhances the economic benefits of diversified HC immigration, especially in secondary towns, challenging traditional views on regional economic growth and emphasizing the need for tailored policies.