Do ethnic minority individuals 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 develop a model in which “oppositional” ethnic minority individuals reside in more segregated areas, have worse outcomes (in terms of income) but are not necessarily worse off in terms of welfare than assimilated ethnic minority individuals who live in less segregated areas. A policy that reduces transportation cost decreases rather than increases assimilation in cities. When there are more productivity spillovers between the two groups, ethnic minority individuals are more likely not to assimilate and to reject the majority's norm. Finally, we show that ethnic minority individuals tend to assimilate more in bigger and more expensive cities.
- Agglomeration economies
- Ethnic minority