Linguistic and Cultural Assimilation as a Capital Investment Process

I develop a learning-by-doing theory of cultural assimilation, in which an individual's cultural identity is determined by past investments in culture-specific capital. The model incorporates several empirically relevant aspects of assimilation that have been difficult to explain in past models. The mechanism in the model yields two possible qualitative outcomes of the assimilation process, depending on the intertemporal complementarities of investment. The first, in which individuals become more homogeneous over time, has been used to explain immigrants' wage assimilation. The second, in which individuals become more heterogeneous as some assimilate and some do not, has different implications for immigration and integration policies. Using detailed datasets from three immigrant destination countries, I provide a variety of evidence from linguistic and identity measures that cultural assimilation (in contrast to economic assimilation) more closely resembles the second type of process