Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/259315 
Year of Publication: 
2001
Series/Report no.: 
Working Paper No. 2001-19
Publisher: 
Bar-Ilan University, Department of Economics, Ramat-Gan
Abstract: 
We consider a small open developing economy, whose population is bifurcated into a majority and a minority group, the latter lacking political influence. Agents are heterogeneous in skills, and decide whether to invest in education when young and whether to migrate in their adulthood. Assuming a rent-extraction basis for discrimination, we first endogenize ethnic discrimination in the benchmark case of an economy closed to migration, and then explore how migration prospects affect ethnic inequality. Under the free migration assumption, we find the intuitive result that migration prospects have a protective effect on the minority. Moreover, the optimal discrimination rate (from the majority’s perspective) is shown to be such that there is no migration at equilibrium, unless the distribution of individuals’ skills exhibits marked asymmetries. Last, we find that immigration restrictions set by receiving countries have the paradoxical effect of creating migration flows which would otherwise have remained latent.
Subjects: 
Ethnic minorities
discrimination
migration
human capital formation
JEL: 
F22
J15
J24
J71
O15
Document Type: 
Working Paper

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