Ethnic Diversity in Compulsory Schooling and Occupational Choices: Can Diversity Increase the Supply in Care‐Oriented Occupations

ABSTRACT We investigate the effect of ethnic diversity on occupational choices, particularly in care‐oriented occupations which are scarce in many high‐income countries. We use administrative data of all students in Switzerland to study two diversity dimensions: ethnic fractionalization and ethnic polarization. We exploit variation across school cohorts to identify causal effects. We find opposing effects: ethnic fractionalization increases care‐oriented occupations, while ethnic polarization reduces them. One mechanism could be that ethnic fractionalization enhances social skills and thereby the benefits of choosing care‐oriented occupations. Thus, not only is the share of nonnative peers in schools important, but also the overall ethnic composition.