Optimal Dynamic Management of the Population Mix

01.01.2006 - 31.12.2009
Research funding project
A challenging but common problem of contemporary society is to spread out marginalized populations among established middle-class communities without inducing the inhabitants of these communities to outward migration or ¿flight¿. There is now considerable evidence that the overall social welfare is lower when marginalized populations are segregated in ¿ghettos¿ than when they are integrated in socially and economically successful mainstream communities. However, it is also well-known that mainstream families tend to ¿flee¿ when faced with an influx of marginal migrants. Hence, policy makers should seek to find an optimal compromise between preserving the established population in a neighborhood and facilitating the inflow of marginalized families. This problem has received considerable attention in the policy-oriented literature. However, the dynamic tension emerging from the fact that an influx of marginalized persons in a settled community has both positive (increased social assimilation) and negative (departures of existing inhabitants) effects, has only very recently been addressed with powerful analytic methods such as optimal control. Our recent analysis of the integration of poor people into middle-class neighborhoods has shown that the appropriate policy options can be much more sophisticated than is usually assumed in the existing literature. In particular, the policy to be adopted may crucially depend on the current state of social integration. The dependency of the optimal policy on the initial conditions appears to be a common property of many public policy models. Until now, however, it has been mostly investigated on an ad hoc basis. Within the planned research on social integration we will also develop advances in the theory of multiple equilibria, path dependence and ¿tipping¿, which should be applicable to many other policy-relevant problems as well. The suggested research has therefore very concrete, practical motivations. In addition, it is directly related to one of the currently most active and promising topics in academic research, the economic analysis of group effects, social interactions and networks, in particular with respect to the design of efficient policies.

People

Project leader

Project personnel

Institute

Grant funds

  • Österreichische Nationalbank, Jubiläumsfonds (National) Jubilee Fund of the Austrian National Bank

Research focus

  • Beyond TUW-research focus: 40%
  • Mathematical and Algorithmic Foundations: 30%
  • Modeling and Simulation: 30%

Keywords

GermanEnglish
Dynamische Segregationdynamic segregation
Öffentliche Politikpublic policy
Externe Effekteexternal effects
Multiple Gleichgewichtemultiple equilibria
Nichtlineare optimale Kontrollenonlinear optimal control

Publications