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Sorting and Long-Run Inequality

  • Raquel Fernandez
  • Richard Rogerson

Many social commentators have raised concerns over the possibility that increased sorting in a society can 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. Contrary to Kremer's (1997) finding of a basically insignificant effect of marital sorting on inequality, we find that increased marital sorting will significantly increase income inequality. Three factors are central to our findings: a negative correlation between fertility and education, a decreasing marginal effect of parental education on children's years of education, and wages that are sensitive to the relative supply of skilled workers.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7508.

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Date of creation: Jan 2000
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Publication status: published as Fernandez, Raquel and Richard Rogerson. "Sorting And Long-Run Inequality," Quarterly Journal of Economics, 2001, v116(4,Nov), 1305-1341.
Handle: RePEc:nbr:nberwo:7508
Note: EFG LS
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  1. Bénabou, Roland, 1993. "Heterogeneity, Stratification and Growth," CEPR Discussion Papers 815, C.E.P.R. Discussion Papers.
  2. Cooper, Suzanne J, 1998. " A Positive Theory of Income Redistribution," Journal of Economic Growth, Springer, vol. 3(2), pages 171-95, June.
  3. Fernandez, Raquel & Gali, Jordi, 1999. "To Each According to . . . ? Markets, Tournaments, and the Matching Problem with Borrowing Constraints," Review of Economic Studies, Wiley Blackwell, vol. 66(4), pages 799-824, October.
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  5. Michael Kremer, 1996. "How Much Does Sorting Increase Inequality?," NBER Working Papers 5566, National Bureau of Economic Research, Inc.
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  8. Behrman, Jere R & Pollak, Robert A & Taubman, Paul, 1989. "Family Resources, Family Size, and Access to Financing for College Education," Journal of Political Economy, University of Chicago Press, vol. 97(2), pages 398-419, April.
  9. Fernandez, Raquel & Rogerson, Richard, 1998. "Public Education and Income Distribution: A Dynamic Quantitative Evaluation of Education-Finance Reform," American Economic Review, American Economic Association, vol. 88(4), pages 813-33, September.
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  13. Oded Galor & Joseph Zeira, 2013. "Income Distribution and Macroeconomics," Working Papers 2013-12, Brown University, Department of Economics.
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  15. Daniel Chen & Michael Kremer, 1999. "Income-Distribution Dynamics with Endogenous Fertility," American Economic Review, American Economic Association, vol. 89(2), pages 155-160, May.
  16. Michael Kremer & Eric Maskin, 1996. "Wage Inequality and Segregation," Harvard Institute of Economic Research Working Papers 1777, Harvard - Institute of Economic Research.
  17. Fernandez, Raquel & Rogerson, Richard, 1996. "Income Distribution, Communities, and the Quality of Public Education," The Quarterly Journal of Economics, MIT Press, vol. 111(1), pages 135-64, February.
  18. Burdett, Ken & Coles, Melvyn G, 1997. "Marriage and Class," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 141-68, February.
  19. Epple, Dennis & Romano, Richard E., 1996. "Ends against the middle: Determining public service provision when there are private alternatives," Journal of Public Economics, Elsevier, vol. 62(3), pages 297-325, November.
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