On the Social Optimality of Residential Segregation. An Evolutionary Agent-Based Analysis

An Evolutionary In the literature on segregation there are two important results about the social optimality of this phenomenon: either segregation is the social optimum or full integration is the social optimum. These opposite results depend upon the individuals' preferences about their neighbours. If there is a population having prejudices against another one then the former applies, but if these prejudices do not exist segregation is a bad news for society. In the case of segregated populations facing difficulties because of this condition, literature has proposed to pay compensating transfers. However, the segregated population's difficulties would affect the society as a whole. For instance, if segregation has as a consequence ghettos of low-skilled labourers, the complete society productivity can diminish, and consequently, the individuals' consumption too. Here an extension of the Schelling's segregation model, considering production, is proposed to research on this issue. The main result is that under the presence of prejudiced groups and social cost due to segregation neither the full segregation nor full integration are social optima but a positive level of segregation lying between.