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Sorting and Long-Run Inequality

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  • Raquel Fernández
  • Richard Rogerson

Abstract

Many social commentators have raised concerns over the possibility that increased sorting in society may lead to greater inequality. To investigate this, we construct a dynamic model of intergenerational education acquisition, fertility, and marital sorting and parameterize the steady state to match several basic empirical findings. We find that increased sorting will significantly increase income inequality. Four factors are important to our findings: a negative correlation between fertility and education, a decreasing marginal effect of parental education on children's years of education, wages that are sensitive to the relative supply of skilled workers, and borrowing constraints that affect educational attainment for some low-income households.

Suggested Citation

  • Raquel Fernández & Richard Rogerson, 2001. "Sorting and Long-Run Inequality," The Quarterly Journal of Economics, Oxford University Press, vol. 116(4), pages 1305-1341.
  • Handle: RePEc:oup:qjecon:v:116:y:2001:i:4:p:1305-1341.
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    File URL: http://hdl.handle.net/10.1162/003355301753265589
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    More about this item

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • I20 - Health, Education, and Welfare - - Education - - - General
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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