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

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.