Heterogeneous Immigration, Segregation and Trade

By introducing taste heterogeneity between mobile workers in a New Economic Geography (NEG) model where the housing price is the main driving force behind dispersion of workers we show that residential segregation and agglomeration are not the sole stable equilibria and that dispersion also emerges with trade liberalization. In addition we find that contrary to the Tiebout hypothesis where segregation is efficient, here it is the dispersed and mixed equilibrium which can be improving for all.