In the debate on migration, the hypothesis has been raised that more diverse societies have a higher economic growth. A much stated reason for this hypothesis elaborates on the work of Jane Jacobs and says that societies with more ethnic diversity might perform better due to a higher variety of abilities and experiences, which lead to better and more innovative ideas and cause a higher productivity and economic growth. A counter argument though, is that diversity might decrease economic performance due to higher communication costs. Previous empirical studies suggested that cities with more ethnic diversity indeed have better economic performance. If this is the case, it is interesting to explore which mechanisms cause this. One possibility is that the effect occurs at the level of the firm. This could also explain a positive relationship on the level of the city, since firms in more diverse cities are more likely to have a more diverse employee composition. This paper studies the possibility that employee diversity improves firm performance by using firm-level data for Dutch firms in the period 2000-2008. We construct an index for diversity for each firm and determine the relationship with total factor productivity (TFP) by entering this index directly in the production function. Besides looking at TFP, we also consider several other productivity indicators, like output per employee and the average wage level. Diversity is measured as the probability that two randomly selected employees are born in a different country. Our results suggest that, based on cross-section estimations, firms that are more diverse are slightly more productive and pay higher wages. However, when we follow firms over time with fixed effects estimations, a change in diversity has no significant effect on firm productivity.