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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 M. Lopoo, 2005. "Has the Intergenerational Transmission of Economic Status Changed?," Journal of Human Resources, University of Wisconsin Press, vol. 40(1).
  2. Lorraine Dearden & Stephen Machin & H Reed, 1996. "Intergenerational Mobility in Britain," CEP Discussion Papers dp0281, Centre for Economic Performance, LSE.
  3. 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).
  4. repec:nsr:niesrd:69 is not listed on IDEAS
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Cited by:
  1. Mario Piacentini, 2008. "Migration Enclaves, Schooling Choices and Social Mobility," Development Working Papers 265, Centro Studi Luca d\'Agliano, University of Milano.
  2. James W. Boudreau, 2008. "Stratification and Growth in Agent-based Matching Markets," Working papers 2008-30, University of Connecticut, Department of Economics.
  3. Wolfgang Eggert & Tim Krieger & Volker Meier, 2007. "Education, Unemployment and Migration," CESifo Working Paper Series 2119, CESifo Group Munich.
  4. Yannis M. Ioannides & Linda Datcher Loury, 2002. "Job Information Networks, Neighborhood Effects and Inequality," Discussion Papers Series, Department of Economics, Tufts University 0217, Department of Economics, Tufts University.
  5. Zuluaga, Blanca, 2013. "Quality of social networks and educational investment decisions," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 43(C), pages 72-82.

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