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

  • Dan Anderberg
  • Fredrik Andersson

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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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. repec:nsr:niesrd:69 is not listed on IDEAS
  3. Lorraine Dearden & Steve Machin & Howard Reed, 1995. "Intergenerational mobility in Britain," IFS Working Papers W95/20, Institute for Fiscal Studies.
  4. Gregg, Paul & Wadsworth, Jonathan, 1996. "How Effective Are State Employment Agencies? Jobcentre Use and Job Matching in Britain," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(3), pages 443-67, August.
  5. Pedro Carneiro & James J. Heckman, 2002. "The Evidence on Credit Constraints in Post-Secondary Schooling," NBER Working Papers 9055, National Bureau of Economic Research, Inc.
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