  We study the migrants' assimilation, which we conceptualize as forming human
capital productive on the labor market of a developed host country, and we link
the observed frequent lack of assimilation with the relative deprivation that
the migrants start to feel when they move in social space towards the natives.
In turn, we presume that the native population is heterogenous and consists of
high-skill and low-skill workers. The presence of assimilated migrants might
shape the comparison group of the natives, influencing the relative deprivation
of the low-skill workers and, in consequence, the choice to form human capital
and become highly skilled. To analyse this interrelation between assimilation
choices of migrants and skill formation of natives, we construct a
coevolutionary model of the open-to-migration economy. Showing that the economy
might end up in a non-assimilation equilibrium, we discuss welfare consequences
of an assimilation policy funded from tax levied on the native population. We
identify conditions under which such costly policy can bring the migrants to
assimilation and at the same time increase the welfare of the natives, even
though the incomes of the former take a beating.
