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How Much does Sorting Increase Inequality?

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  • Michael Kremer

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.

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  • Michael Kremer, 1997. "How Much does Sorting Increase Inequality?," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 115-139.
  • Handle: RePEc:oup:qjecon:v:112:y:1997:i:1:p:115-139.
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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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