We study cultural integration as an equilibrium outcome of marital matching and collective household decisions with regards to fertility, and cultural socialization of children. Structural estimates of the model with administrative Italian micro data reveal a strong demand for the preservation of their cultural identity on the part of immigrants and little cultural acceptance of the immigrants’ diversity on the part of natives. Nonetheless, at the estimated parameter values, we simulate substantial, though heterogeneous, integration rates across immigrant groups, 75% on average over one generation. We show by counterfactual analysis how more accepting preferences of the natives would lead to slower cultural integration, while a reduction in economic incentives to immigrants would increase their integration rate. Finally, we evaluate a policy that leads to positive contemporaneous and dynamic social welfare effects by strengthening the ethnic network of immigrants in the society.

Link to paper: www.dropbox.com/s/cc5uz1gpdnkkve1/MarriageFertilityIntegration_Oct2020.pdf?dl=0

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