What is an appropriate way to tackle prejudice in a fantasy world?

Hi,

I am currently working on a Video game at the moment. It is in a pretty classic fantasy world where the main species of humanoids are humans, dwarves and elves. The main protagonist is a dwarf, and the other party members are an elf and a human. The game would take place in a human centric kingdom. One of the themes I wanted to explore in this game is Immigration. Most importantly being child of immigrants. To have ties to one culture but growing up in another and how you seek community and how the sense of belonging you have to either culture. It is important to know that I am myself child of immigrants which is why I want to focus on that subject. So, I am not talking about a subject that

However, I do know that using fantasy races as parallels for prejudice and racism can be tricky and sometimes not great. To avoid issues my main thoughts were that the main differences between the human, dwarves and elves would be mostly cultural. There would be the obvious difference like dwarves being shorter and elves having pointy ears. But other than that, they would have similar life spans, and no race would really have any natural advantage over the other. Even their different magic systems are more of a cultural thing, and even the main character of the game use a mix of dwarven and human magic to show his ties to both cultures. My thoughts were also to focus less on the actual hatred of other races, and more on how certain immigrant communities are seen. (like just being dismissed as cheap labor, or not valuing their skills and culture) How that can sometimes make you feel like an outsider even in a culture you grew up in.

So yeah, I guess I mainly wanted some thoughts and ideas on this subject and how I should tackle it. Or even if I should just avoid it all together and that it would not work that much in a fantasy setting.

Thanks in advance!