Speaker(s) Saumya Rana, University of Houston Publication CAFRAL Conference room on Mezzanine Floor, Main Building. Reserve Bank of India, Fort, Mumbai 400 001

Parent’s desire to transmit their culture to their children can lead them to reside with neighbours of the same ethnicity. Ethnic segregation may be an outcome of such sorting. In this paper, I develop a theoretical model of intergenerational cultural transmission that incorporates moving and neighbour choices. I prove how these choices can generate a dynamic equilibrium in which ethnic segregation will persist in the long run at the disaggregate neighbourhood level with diversity in the aggregate.

I examine whether model predictions regarding these segregation-inducing parental moves are supported by data. I use U.S Census Microdata (1990, 2000) and U.K Fourth National Survey of Ethnic Minorities (1993-1994). The empirical strategy exploits variation in moves by the presence and age of children, ethnicity shares and cultural motivations. I find that a one standard deviation increase in share of own ethnicity in a location reduces the probability of leaving that location by .8 percentage points (7.3%) for parents compared to non-parents. Parents are also 1.76 percentage points (3.6%) more likely to go from a location with a lower share of own ethnicity to one with a higher share of own ethnicity. These effects are stronger for parents with young children (eg. 14.2% and 5.4% for ages 1-3). The findings suggest that young children may be disproportionately more exposed to ethnic enclaves than others. Cultural transmissions appears to be an important determinant

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