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Stratification, Social Networks in the Labour Market, and Intergenerational Mobility

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  • Dan Anderberg
  • Fredrik Andersson

Abstract

Young individuals, taking the locational choices made by their altruistic parents as given, decide whether or not to acquire skills. The use of location-specific word-of-mouth communication in the transmission of information about (skilled) job opportunities implies that the local social environment partly determines an individual's expected returns to education. Stratified equilibria, when they exist, are characterised by low intergenerational social mobility and inefficient use of talent. In addition, the equilibrium responses to factors that generally encourage education may, in stratified outcomes, be highly asymmetric across socio-economic groups. Non-stratified equilibria are likely to be destabilised by measures that encourage education. Copyright 2007 The Author(s). Journal compilation Royal Economic Society 2007.

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Bibliographic Info

Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 117 (2007)
Issue (Month): 520 (04)
Pages: 782-812

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Handle: RePEc:ecj:econjl:v:117:y:2007:i:520:p:782-812

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  1. Susan E. Mayer & Leonard Michael Lopoo, 2001. "Has the Intergenerational Transmission of Economic Status Changed?," JCPR Working Papers 227, Northwestern University/University of Chicago Joint Center for Poverty Research.
  2. Carneiro, Pedro & Heckman, James J., 2002. "The Evidence on Credit Constraints in Post-Secondary Schooling," IZA Discussion Papers 518, Institute for the Study of Labor (IZA).
  3. repec:nsr:niesrd:69 is not listed on IDEAS
  4. Lorraine Dearden & Steve Machin & Howard Reed, 1995. "Intergenerational mobility in Britain," IFS Working Papers W95/20, Institute for Fiscal Studies.
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Cited by:
  1. Wolfgang Eggert & Tim Krieger & Volker Meier, 2009. "Education, unemployment and migration," Ifo Working Paper Series Ifo Working Paper Nr. 78, Ifo Institute for Economic Research at the University of Munich.
  2. James W. Boudreau, 2008. "Stratification and Growth in Agent-based Matching Markets," Working papers 2008-30, University of Connecticut, Department of Economics.
  3. Piacentini, Mario, 2008. "Migration Enclaves, Schooling Choices and Social Mobility," MPRA Paper 8376, University Library of Munich, Germany.
  4. Yannis M. Ioannides & Linda Datcher Loury, 2004. "Job Information Networks, Neighborhood Effects, and Inequality," Journal of Economic Literature, American Economic Association, vol. 42(4), pages 1056-1093, December.
  5. Blanca ZULUAGA, 2010. "Quality of social networks and educational investment decisions," Center for Economic Studies - Discussion papers ces10.29, Katholieke Universiteit Leuven, Centrum voor Economische Studiƫn.

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