Levels of neutral genetic diversity in populations subdivided into two demes were studied by multi-locus stochastic simulations. The model includes deleterious mutations at loci throughout the genome, causing ‘background selection’, as well as a single locus at which a polymorphism is maintained, either by frequency-dependent selection or by local selective differences. These balanced polymorphisms induce long coalescence times at linked neutral loci, so that sequence diversity at these loci is enhanced at statistical equilibrium. We study how equilibrium neutral diversity levels are affected by the degree of population subdivision, the presence or absence of background selection, and the level of inbreeding of the population. The simulation results are compared with approximate analytical formulae, assuming the infinite sites neutral model. We discuss how balancing selection can be distinguished from local selection, by determining whether peaks of diversity in the region of the polymorphic locus are seen within or between demes. The width of such diversity peaks is shown to depend on the total species population size, rather than local deme sizes. We show that, with population subdivision, local selection enhances between-deme diversity even at neutral sites distant from the polymorphic locus, producing higher FST values than with no selection; very high values can be generated at sites close to a selected locus. Background selection also increases FST, mainly because of decreased diversity within populations, which implies that its effects may be distinguishable from those of local selection. Both effects are stronger in selfing than outcrossing populations. Linkage disequilibrium between neutral sites is generated by both balancing and local selection, especially in selfing populations, because of linkage disequilibrium between the neutral sites and the selectively maintained alleles. We discuss how these theoretical results can be related to data on genetic diversity within and between local populations of a species.