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Social Interactions and Segregation in Skill Accumulation

Author

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  • Dilip Mookherjee
  • Stefan Napel
  • Debraj Ray

Abstract

This paper studies human capital investment in a spatial setting with interpersonal complementarities. A mixture of local and global social interactions affects the cost of acquiring education, and the return to human capital is determined endogenously in the market. We study how spatially segregated investment equilibria are affected by an increase in the relative importance of global vis-à-vis local interactions. Per capita income level, equality, and welfare are shown to improve if the skilled constitute a majority to begin with, and if not, these implications are reversed. We also examine the effects of wider local neighborhoods, and lower mobility costs, and study a related two-group model based on social distance. (JEL: D31, O15, D85) (c) 2010 by the European Economic Association.

Suggested Citation

  • Dilip Mookherjee & Stefan Napel & Debraj Ray, 2010. "Social Interactions and Segregation in Skill Accumulation," Journal of the European Economic Association, MIT Press, vol. 8(2-3), pages 388-400, 04-05.
    • Handle: RePEc:tpr:jeurec:v:8:y:2010:i:2-3:p:388-400
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    Citations

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    Cited by:

    1. Jing Cai & Alain De Janvry & Elisabeth Sadoulet, 2015. "Social Networks and the Decision to Insure," American Economic Journal: Applied Economics, American Economic Association, vol. 7(2), pages 81-108, April.
    2. Berardino Cesi & Dimitri Paolini, 2014. "Peer Group and Distance: When Widening University Participation is Better," Manchester School, University of Manchester, vol. 82, pages 110-132, December.

    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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