Working Paper: CEPR ID: DP13364
Authors: Yasuhiro Sato; Yves Zenou
Abstract: We develop a model in which ethnic minorities can either assimilate to the majority's norm or reject it by trading off higher productivity and wages with a greater social distance to their culture of origin. We show that "oppositional" minorities reside in more segregated areas, have worse outcomes (in terms of income) but are not necessary worse off in terms of welfare than assimilated minorities who live in less segregated areas. We find that a policy that reduces transportation cost decreases rather than increases assimilation in cities. We also find that when there are more productivity spillovers between the two groups, ethnic minorities are more likely not to assimilate and to reject the majority's norm. Finally, we show that ethnic minorities tend to assimilate more in bigger and more expensive cities.
Keywords: Ethnic Identity; Agglomeration; Cities; Welfare
JEL Codes: J15; R14; Z13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Assimilation (Y60) | Income (D31) |
| Transportation Costs (L91) | Assimilation (Y60) |
| Productivity Spillovers (O49) | Rejection of Majority's Norms (Z13) |
| Urban Size (R12) | Assimilation (Y60) |
| Assimilation (Y60) | Welfare Outcomes (I38) |