Heterogeneity, Stratification, and Growth
We examine how economic stratification affects inequality and growth over time. We study economies where heterogenous agents interact through local public goods or externalities (school funding, neighborhood effects) and economy-wide linkages (complementary skills. knowledge spillovers). We compare growth and welfare when families are stratified into homogeneous local communities and when they remain integrated. Segregation tends to minimize the losses from a given amount of heterogeneity, but integration reduces heterogeneity faster. Society may thus face an intertemporal tradeoff: mixing leads to slower growth in the short run, but to higher output or even productivity growth in the long run. This tradeoff occurs in particular when comparing local and national funding of education, which correspond to special cases of segregation and integration. More generally, we identify the key parameters which determine which structure is more efficient over short and long horizons. Particularly important are the degrees of complementarity in local and in global interactions.
|Date of creation:||Apr 1993|
|Date of revision:|
|Publication status:||published as modified title: "Heterogeneity, Stratification and Growth: Macroeconomicmplications of Community Structure and School Finance," American Economic Review, vol. 86, no. 3, pp. 584-609, June 1996.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- George J. Borjas, 1994.
"Ethnicity, Neighborhoods, and Human Capital Externalities,"
NBER Working Papers
4912, National Bureau of Economic Research, Inc.
- Borjas, George J, 1995. "Ethnicity, Neighborhoods, and Human-Capital Externalities," American Economic Review, American Economic Association, vol. 85(3), pages 365-90, June.
- Glenn C. Loury, 1976. "A Dynamic Theory of Racial Income Differences," Discussion Papers 225, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Durlauf, S.N., 1992.
"A Theory of Persistent Income Inequality,"
47, Stanford - Institute for Thoretical Economics.
- Arnott, Richard & Rowse, John, 1987.
"Peer group effects and educational attainment,"
Journal of Public Economics,
Elsevier, vol. 32(3), pages 287-305, April.
- Loury, Glenn C, 1981. "Intergenerational Transfers and the Distribution of Earnings," Econometrica, Econometric Society, vol. 49(4), pages 843-67, June.
- Roland Benabou, 1993.
"Workings of a City: Location, Education, and Production,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 108(3), pages 619-652.
- Roland Benabou, 1991. "Workings of a City: Location, Education, and Production," NBER Technical Working Papers 0113, National Bureau of Economic Research, Inc.
- Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1990.
"The Allocation of Talent: Implications for Growth,"
NBER Working Papers
3530, National Bureau of Economic Research, Inc.
- Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1990. "The Allocation of Talent: Implicationsfor Growth," University of Chicago - George G. Stigler Center for Study of Economy and State 65, Chicago - Center for Study of Economy and State.
- Burda, Michael & Wyplosz, Charles, 1992.
"Human capital, investment and migration in an integrated Europe,"
European Economic Review,
Elsevier, vol. 36(2-3), pages 677-684, April.
- Burda, Michael C & Wyplosz, Charles, 1991. "Human Capital, Investment and Migration in an Integrated Europe," CEPR Discussion Papers 614, C.E.P.R. Discussion Papers.
- Banerjee, A.V. & Besley, T., 1990. "Peer Group Externalities And The Learning Incentives: A Theory Of Nerd Behavior," Papers 68, Princeton, Woodrow Wilson School - Discussion Paper.
- Tamura, R., 1991.
"Efficient Equilibrium Convergence : Heterogeneity and Growth,"
91-16, University of Iowa, Department of Economics.
- Tamura, Robert, 1992. "Efficient equilibrium convergence: Heterogeneity and growth," Journal of Economic Theory, Elsevier, vol. 58(2), pages 355-376, December.
- Tamura, Robert, 1991. "Income Convergence in an Endogenous Growth Model," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 522-40, June.
- Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
- George J. Borjas, 1992. "Ethnic Capital and Intergenerational Mobility," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 123-150.
- Raquel Fernandez & Richard Rogerson, 1992.
"Income Distribution, Communities and the Quality of Public Education: A Policy Analysis,"
NBER Working Papers
4158, National Bureau of Economic Research, Inc.
- Fernandez, R. & Rogerson, R., 1992. "Income Distribution, Communities and the Quality of Public Education: A Policy Analysis," Papers 1, Boston University - Department of Economics.
- Streufert, Peter, 2000. " The Effect of Underclass Social Isolation on Schooling Choice," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 2(4), pages 461-82.
- Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:4311. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.