Designing an Immigrant Social Integration Policy

Abstract

I estimate a dynamic general equilibrium model of neighborhood choice and immigrants’ cultural assimilation using an 18-year-long micro panel dataset that includes neighborhood choices and proxy variables for immigrants’ cultural traits. Both immigrants and natives choose their neighborhoods, considering cultural similarities with neighbors. Immigrants also make decisions about their level of cultural assimilation, with the associated costs varying based on their exposure to native residents. Using the model estimates, I show how a hypothetical rent subsidy, granted conditional on living in a diverse neighborhood, can induce neighborhood desegregation and immigrants’ cultural assimilation under a budget-balancing tax.

Keywords: Social Engineering, Social Integration, Neighborhood Choice, Residential Sorting, Assimilation