The paper analyzes the population dynamics of a country that has two ethnic groups, a minority and a majority. Minority members can choose whether or not to assimilate into the majority. If the minority is small, the long-run outcome is full assimilation. When the minority is large, the unique long-run equilibrium is the initial situation. For intermediate minority sizes multiple equilibria are possible, including the full- and no-assimilation ones. The paper also solves the social planner's problem, which indicates that the country can end up in an inefficient steady state. Even if the steady state is the optimal one, the equilibrium path will be suboptimal. Two extensions to the basic model are considered. The first one allows for a comparison between a multicultural and a "melting pot" society. The second one introduces population growth and studies the interplay between exogenous and endogenous changes in the minority's size.
Cultural Assimilation, Population Dynamics, Ethnic Groups, Social Optimum Classification- JEL: D62, J15, Z19
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