C. Chiswick 1 Economic Determinants of Ethnic Assimilation by Carmel U. Chiswick University of Illinois at Chicago and IZA

C. Chiswick 2 Ethnicity is different from Race or Ancestry Children raised in an ethnic environment (family, community) acquire ethnicity- specific human capital. Degree of attachment to an ethnic group is enhanced by investment in ethnicity- specific human capital.

C. Chiswick 3 Ethnicity-Specific and Shared Human Capital Language Religion Family structure (marriage, childrearing) Intellectual, cultural and social life Preferences in food, music, art Attitudes toward Individualism Occupations Political Interests (concerns, participation)

C. Chiswick 4 Outline of Presentation An Economic Model of Ethnicity Two Concepts of Assimilation – Convergence – Pluralism External Economies, Diseconomies Some Policy Implications

C. Chiswick 5 An Economic Model of Ethnicity Ethnicity is a z-good with utility- generating attributes. Ethnicity-specific human capital is acquired in the family and community, often at a very young age. Assumption #1: Only 2 groups (Ethnicity A and Ethnicity B) with a shared General society and the possibility of switching.

C. Chiswick 6 L E = Time spent on Ethnic activities L Y = Time spent on other consumption L ES = Ethnic-specific education (experience, socialization) L YS = General education L* = total time constraint h E = Ethnic-specific human capital h Y = General human capital Modeling Ethnic Education Max U i = U (E, Y) s.t. L E + L Y + L ES + L YS = L* E = g(L E, h E ) Y = f(L Y, h Y ) L YS = φ (h Y ) L ES = γ (h E ) - ω h E h Y

C. Chiswick 7 Derived Demand for Human Capital Ethnic Human Capital Shared Human Capital

C. Chiswick 8 Derived Demand for Ethnic Human Capital: Strong Preference for Ethnic Goods Ethnic Human Capital Shared Human Capital

C. Chiswick 9 Derived Demand for Ethnic Human Capital: Weak Preference for Ethnic Goods Ethnic Human Capital Shared Human Capital

C. Chiswick 10 Derived Demand for Ethnic Human Capital: No Externalities Ethnic Human Capital Shared Human Capital

C. Chiswick 11 Assumption #2: There is a threshold level of ethnic human capital h E * above which ethnic identity is strong and the propensity to converge is low. Assimilation by Convergence Assimilation defined as switching from a specific ethnicity to the shared ethnicity. Often associated with intermarriage. Ethnic human capital is positively related to the productivity of ethnic identification. –Non-transferability raises the cost of switching as h E increases. Assimilation depends on rate of return to switching. Most likely to occur when h E < h E *

C. Chiswick 12 Propensity to Assimilate by Convergence Ethnic Human Capital Shared Human Capital hE*hE* Low Convergence High Conver- gence

C. Chiswick 13 Assimilation by Pluralism Mainstream culture accepts ethnic diversity. Assimilation defined as participation in the shared society (acculturation). Assumption #3: There is a threshold level of shared human capital h Y * above which people are acculturated into a common mainstream. Assimilation occurs for people with h Y > h Y *

C. Chiswick 14 Propensity to Assimilate by Acculturation Ethnic Human Capital Shared Human Capital hY*hY* High levels of Acculturation Low levels of Acculturation

C. Chiswick 15 Propensity to Assimilate: A General Model Ethnic Human Capital Shared Human Capital hE*hE* Unacculturated Ethnics Convergence Zone hY*hY* Acculturated Ethnics Under- class?

C. Chiswick 16 Education Externalities Negative interactions (ω < 0) –Ethnic values, attitudes, etc. conflict with the larger society –Ethnic educational methods conflict with general education Positive interactions (ω > 0) –Ethnic and shared values compatible –Ethnic and shared education mutually reinforcing

C. Chiswick 17 Derived Demand for Ethnic Human Capital: Negative Externalities Ethnic Human Capital Shared Human Capital

C. Chiswick 18 Propensity to Assimilate: Negative Externalities Ethnic Human Capital Shared Human Capital h Y * hE*hE* Acculturated Ethnics Con- vergence Zone Unacculturated Ethnics Under- class

C. Chiswick 19 Derived Demand for Ethnic Human Capital: Positive Externalities Ethnic Human Capital Shared Human Capital

C. Chiswick 20 Propensity to Assimilate: Positive Externalities Ethnic Human Capital Shared Human Capital h Y * hE*hE* Unacculturated Ethnics Con- vergence Zone Acculturated Ethnics Under- class

C. Chiswick 21 Conclusions #1: Externalities in Education Positive externalities in education increase levels of acculturation without stressing convergence. –Raise rates of return to investment in both ethnic and shared human capital. –Encourage mutual adaptations between shared and ethnic-specific cultures. Negative externalities in education increase convergence (e.g., through intermarriage) but reduce the acculturation of ethnic groups. –Ethnic groups self-selected for low general education.

C. Chiswick 22 Conclusions #2: Convergence vs. Pluralism Homogeneous societies discourage acculturation of ethnic groups. –When convergence defines assimilation, individuals are forced to choose. –Ethnically identified individuals may be self-selected for low acculturation and voluntary isolation. –Homogeneous model can justify “ethnic cleansing.” Pluralistic Societies encourage acculturation of ethnic groups. –Minimizes “problems” associated with ethnicity (raises ω) –Diversity can be a good in its own right. –Benefit from ethnicity-based comparative advantage

End of Slide Show

C. Chiswick 24 Intermarriage Propensities for Two Ethnic Groups Shared Skills Ethnic Skills Group A Ethnic Skills Group B h EB *h EA * Low propensity to Intermarry Intermarriage Zone

C. Chiswick 25 Intermarriage Propensities for ω<0 Shared Skills Ethnic Skills Group A Ethnic Skills Group B h EB *h EA * Unacculturated Group A Acculturated Intermarriage Zone hY*hY* Unacculturated Group B

C. Chiswick 26 Intermarriage Propensities for ω>0 Shared Skills Ethnic Skills Group A Ethnic Skills Group B h EB *h EA * Unacculturated Group A Unacculturated Group B hY*hY* Acculturated Intermarriage Zone