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How Much Does Sorting Increase Inequality?

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Author Info
Kremer, Michael

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Abstract

Some commentators argue that increased sorting into internally homogeneous neighborhoods, schools, and marriages is radically polarizing society. Calibration of a formal model, however, suggests that the steady-state standard deviation of education would increase only 1.7 percent if the correlation between neighbors' education doubled and would fall only 1.6 percent if educational sorting by neighborhood disappeared. The steady-state standard deviation of education would grow 1 percent if the correlation between spouses' education increased from 0.6 to 0.8. In fact, marital and neighborhood sorting have been stable, or even decreasing, historically. Sorting has somewhat more significant effects on intergenerational mobility than on inequality. Copyright 1997, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Publisher Info
Article provided by MIT Press in its journal Quarterly Journal of Economics.

Volume (Year): 112 (1997)
Issue (Month): 1 (February)
Pages: 115-39
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Handle: RePEc:tpr:qjecon:v:112:y:1997:i:1:p:115-39

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References listed on IDEAS
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  1. Kremer, Michael, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 551-75, August. [Downloadable!] (restricted)
  2. Zimmerman, David J, 1992. "Regression toward Mediocrity in Economic Stature," American Economic Review, American Economic Association, vol. 82(3), pages 409-29, June.
  3. Cutler, D.M. & Glaeser, E.L., 1995. "Are Ghettos Good or Bad?," Papers e-95-6, Stanford - Hoover Institution.
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  4. repec:att:wimass:199329 is not listed on IDEAS
  5. Lam, David & Schoeni, Robert F, 1993. "Effects of Family Background on Earnings and Returns to Schooling: Evidence from Brazil," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 710-40, August. [Downloadable!] (restricted)
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  6. Arnott, Richard & Rowse, John, 1987. "Peer group effects and educational attainment," Journal of Public Economics, Elsevier, vol. 32(3), pages 287-305, April. [Downloadable!] (restricted)
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  7. Borjas, George J, 1992. "Ethnic Capital and Intergenerational Mobility," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 123-50, February. [Downloadable!] (restricted)
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  8. Blinder, Alan S, 1976. "Inequality and Mobility in the Distribution of Wealth," Kyklos, Blackwell Publishing, vol. 29(4), pages 607-38.
  9. Nancy A. Jianakoplos & Paul L. Menchik, 1997. "Wealth Mobility," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 18-31, February. [Downloadable!] (restricted)
  10. Bénabou, Roland, 1993. "Heterogeneity, Stratification and Growth," CEPR Discussion Papers 815, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  11. Blinder, Alan S, 1973. "A Model of Inherited Wealth," The Quarterly Journal of Economics, MIT Press, vol. 87(4), pages 608-26, November. [Downloadable!] (restricted)
  12. Raquel Fernandez & Richard Rogerson, 1992. "Income Distribution, Communities and the Quality of Public Education: A Policy Analysis," NBER Working Papers 4158, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  13. Alan Krueger & Orley Ashenfelter, 1992. "Estimates of the Economic Return to Schooling from a New Sample of Twins," NBER Working Papers 4143, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  14. George J. Borjas, 1994. "Ethnicity, Neighborhoods, and Human Capital Externalities," NBER Working Papers 4912, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  15. Kremer, M. & Maskin, E., 1995. "Segregation by Skill and the Rise in Inequality," Papers e-95-7, Stanford - Hoover Institution.
  16. Casey B. Mulligan, . "Economic and Biological Approaches to Inheritance: Some Evidence 1996," University of Chicago - Population Research Center 95-14, Chicago - Population Research Center.
  17. repec:att:wimass:199217 is not listed on IDEAS
  18. Solon, Gary, 1992. "Intergenerational Income Mobility in the United States," American Economic Review, American Economic Association, vol. 82(3), pages 393-408, June. [Downloadable!] (restricted)
  19. Lam, D. & Schoeni, R.F., 1993. "Family Ties and Labor Markets in the United States and Brazil," Papers 93-25, RAND - Labor and Population Program.
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  20. Anne C. Case & Lawrence F. Katz, 1991. "The Company You Keep: The Effects of Family and Neighborhood on Disad- vantaged Youths," NBER Working Papers 3705, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  21. Becker, Gary S & Tomes, Nigel, 1979. "An Equilibrium Theory of the Distribution of Income and Intergenerational Mobility," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1153-89, December. [Downloadable!] (restricted)
  22. Mary Corcoran & Roger H. Gordon & Deborah Laren & Gary Solon, 1989. "Effects of Family and Community Background on Men's Economic Status," NBER Working Papers 2896, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  23. Menchik, Paul L, 1979. "Inter-generational Transmission of Inequality: An Empirical Study of Wealth Mobility," Economica, London School of Economics and Political Science, vol. 46(184), pages 349-62, November. [Downloadable!] (restricted)
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