Journal Article

Minorities and Endogenous Segregation

Jan Eeckhout

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 73, issue 1, pages 31-53
Published in print January 2006 | ISSN: 0034-6527
Published online January 2006 | e-ISSN: 1467-937X | DOI: http://dx.doi.org/10.1111/j.1467-937X.2006.00368.x
Minorities and Endogenous Segregation

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A theoretical analysis is proposed of segregation as an equilibrium phenomenon in a random-matching model of the marriage market. Otherwise identical partners possess a pay-off-irrelevant characteristic, colour. We derive the set of colour-blind equilibria and show that they are generically constrained inefficient. Equilibrium segregation strategies are strategies that condition actions on the type of match. It is shown that distributions of types exist such that segregation equilibrium pay-offs Pareto dominate colour-blind pay-offs. For other distributions, segregation also generates conflict, where the majority unambiguously gains, while the minority group may lose. Giving preferential treatment, that is, minority bias, can increase overall welfare.

Keywords: J12; J15

Journal Article.  12363 words.  Illustrated.

Subjects: Demographic Economics

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