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When 'Equal Opportunity' is not Enough: Training Costs and Intergenerational Inequality

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  • Christopher J. Ruhm

Abstract

This paper develops an individual optimization model with persistent intergenerational immobility. Its key feature is that training costs are negatively correlated with family background, leading to differences in privately optimal training levels across population groups. Heterogeneity of innate abilities is shown to reduce but not eliminate the importance of family backgrounds. Conversely, wage thresholds which result from indivisibilities in the production or training functions or noncompetitive elements in the economy (such as segmented labor markets) increase the scope for inequality in the steady-state.

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  • Christopher J. Ruhm, 1988. "When 'Equal Opportunity' is not Enough: Training Costs and Intergenerational Inequality," Journal of Human Resources, University of Wisconsin Press, vol. 23(2), pages 155-172.
  • Handle: RePEc:uwp:jhriss:v:23:y:1988:i:2:p:155-172
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    References listed on IDEAS

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    Cited by:

    1. Michael Leeds, 2003. "Race, incentives, and opportunities: The importance of timing," The Review of Black Political Economy, Springer;National Economic Association, pages 55-69.
    2. Lundberg, Shelly & Startz, Richard, 1998. "On the Persistence of Racial Inequality," Journal of Labor Economics, University of Chicago Press, vol. 16(2), pages 292-323, April.
    3. Du, Zaichao & LI, Renyu & He, Qinying & ZHANG, Lin, 2014. "Decomposing the rich dad effect on income inequality using instrumental variable quantile regression," China Economic Review, Elsevier, vol. 31(C), pages 379-391.
    4. Albert Link & Christopher Ruhm, 2013. "Fathers’ patenting behavior and the propensity of offspring to patent: an intergenerational analysis," The Journal of Technology Transfer, Springer, vol. 38(3), pages 332-340, June.

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