Intergenerational assimilation of minorities: the role of the majority group

We develop a dynamic model of assimilation of ethnic minorities that posits a trade-off between higher productivity and wages and greater social distance from the culture of origin. We primarily highlight the importance of the intergenerational linkage of assimilation and also incorporate the role of the majority group in the assimilation of ethnic minorities. We first show how the assimilation of the past generation is transmitted to the subsequent generation, and then characterize the intragenerational and intergenerational externalities. Moreover, we explore the interaction of the minority and majority decisions, which accompanies a hump-shaped relationship between the act to tolerate of the majority individuals and the level of assimilation in the society. Such a relationship is also transmitted via intergenerational linkage and causes additional externalities. In fact, more tolerance from the majority group generates positive externalities for the minority group, while each minority group's assimilation effort affects the welfare of the majority individuals differently depending on the initial minority assimilation level.