A novel field experiment is used to evaluate two competing strategies for managing ethnic diversity: (1) assimilationist strategies, which encourage the construction of shared, superordinate social identities (e.g., based on a team or nation), and (2) multiculturalist strategies, which aim to foster beliefs that ethnic differences are valuable. Results from Kenya indicate that assimilationist approaches are more effective at minimizing diversity’s social costs, such as discrimination and reduced cohesion. But multiculturalist approaches are better at maximizing diversity’s economic benefits, such as increased creativity and problem-solving capabilities. I also provide evidence that the productivity gains from ethnic diversity are larger than the gains from age, birthplace, gender, and religious diversity, and driven by skill complementarities between ethnic groups. These findings provide an empirical foundation for adjudicating between competing theories about diversity’s costs and benefits, and strategies for managing them.