Segmented assimilation: a minority's dilemma

What factors determine a minority group's extent/pattern of assimilation with the mainstream population in a country? We study this question in a dynamic multi-generation model, and formalize the sociological theory of segmented assimilation propounded by Portes and Zhou (1993). Our key assumptions are: there exists cultural heterogeneity within a minority group, minority members can shift their inherited culture traits to an extent, shifting culture traits closer to the mainstream culture increases economic opportunities, benefits from being close to the dominant local culture generate social interaction effects in minority and mainstream locations, and minority members are motivated by short-term goals. We show that specific features of the socio-economic environment -- regarding the extent of initial culture heterogeneity among the minority, and the influence of local social interaction effects on their payoffs -- lead to segmented assimilation in the long run: In a sequence of generations, some minority members -- those born with culture traits `close enough' to the mainstream culture -- move towards assimilating with the mainstream, while other members dissociate from the mainstream and become more entrenched in the traditional minority sub-culture. Such intertemporal segmentation, that arises in the absence of a minority preference for oppositional identities, can impose significant costs on the entire minority group in the long-run: poverty, inequality, and polarization. There can be hysteresis in the evolution of minority lineages. The efficacy of a policy intervention will depend on how it impacts the minority assimilation trajectory: an ill-timed affirmative-action policy can lower payoffs of all minority members in the long-run.