Fabien Moizeau () (CREM - Université de Rennes1) Jean-Philippe Tropeano () (GAEL (INRA) - Université Pierre Mendès France) Jean-Christophe Vergnaud () (Centre d'Economie de la Sorbonne)
Abstract
In this paper, we provide a theoretical framework for exploring the consequences of neighborhood informational effects - identified as role models - so as to deduce the urban configuration. With this aim, we have developed an overlapping generations model of community formation. When young, an individual must choose whether to invest in education or not. The crucial feature of our framework is that children assess the economic pay-off of education by observing the experience of the older genneration residing in their neighborhood. When an adult, an individual who cares about her offspring's income must choose the family's location. We show that there exist two urban configurations. (i) An integrated city may occur where the socio-economic composition of each neighborhood makes its inhabitants well informed and therefore willing to invest in education. (ii) A segregated city may emerge where socio-economic segreegation makes the inhabitants of poor communities be misinformed about the benefits of education.
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Find related papers by JEL classification: D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information I2 - Health, Education, and Welfare - - Education J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity R1 - Urban, Rural, and Regional Economics - - General Regional Economics
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