Using data on a student group project in which groups are exogenously formed, we examine the potential productivity gains from employing work-teams which are diverse in terms of gender, nationality and ability. We find no significant effect of diversity on overall team performance, except when the team members are from different socio-cultural backgrounds. More importantly, we find that students who have worked in more diverse teams experience a subsequent improvement in individual productivity. These individual productivity gains hold for both domestic and foreign students, and for students of different levels of ability. Our results suggest a mechanism by which diversity enhances individual and collective performance.