The Interplay between Migrants and Natives as a Determinant of Migrants' Assimilation A Coevolutionary Approach

Abstract

We study the migrants’ assimilation, which we conceptualize as forming
human capital productive on the labor market of a developed host country, and
we link the observed frequent lack of assimilation with the relative deprivation
that the migrants start to feel when they move in social space towards the
natives. We presume that the native population is heterogeneous and consists
of high-skill and low-skill workers. The presence of assimilated migrants might
shape the comparison group of the natives, influencing the relative deprivation of
the low-skill workers and, in consequence, the choice to form human capital and
become highly skilled. To analyse this interrelation between assimilation choices
of migrants and skill formation of natives, we construct a coevolutionary model
of the open-to-migration economy. Showing that the economy might end up in a
non-assimilation equilibrium, we discuss welfare consequences of an assimilation
policy funded from tax levied on the native population. We identify conditions
under which such costly policy can bring the migrants to assimilation and at
the same time increase the welfare of the natives, even though the incomes of
the former take a beating.