Endogenous discrimination, migration prospects and the protection of ethnic minorities

We consider an ethnically-divided developing country, where education is the only investment outlet and the minority is subject to governmental discrimination. We endogenize ethnic discrimination in a political economy framework, and investigate how it is affected by migration prospects. We show that the possibility of emigration tends to protect the minority from excessive rent-extraction, but may paradoxically turn out to be a curse for its remaining members when migration costs are sufficiently low.