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Segregation, Education Cost, and Group Inequality

Author

Listed:
  • Kim Young-Chul

    (Department of Economics, Sogang University, Seoul 04107, Republic of Korea)

  • Ryu Doojin

    (Department of Economics, Sungkyunkwan University, Seoul 03063, Republic of Korea)

Abstract

This study analyzes the interplay between the segregation level, education cost, and the evolution of group inequality. In a market economy, individuals have incentives to invest in skill acquisition because of wage differentials. Because skill achievement is costly, a person with a higher inherent ability or a better community background is more likely to invest. Bowles, Loury, and Sethi (2014) show the possibility of group inequality evolution with a high level of segregation when network externalities over the skill acquisition period affect an individual’s decision of skill achievement. This study emphasizes the effect of education costs on the evolution of group inequality. Even when the level of segregation is high, if the societal education cost of skill acquisition is not sufficiently large, group skill disparity may not evolve. Observing that education costs vary significantly across countries depending on the structure of their educational institutions, this theoretical analysis suggests that some countries may suffer more from between-group disparity than others because their education systems impose higher costs on individuals.

Suggested Citation

  • Kim Young-Chul & Ryu Doojin, 2023. "Segregation, Education Cost, and Group Inequality," Economics - The Open-Access, Open-Assessment Journal, De Gruyter, vol. 17(1), pages 1-10, January.
    • Handle: RePEc:bpj:econoa:v:17:y:2023:i:1:p:10:n:1
    DOI: 10.1515/econ-2022-0042
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    References listed on IDEAS

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    More about this item

    Keywords

    group inequality; segregation; peer effects; education cost; I24; I30; J15;
    All these keywords.

    JEL classification:

    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

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