Social interactions and segregation in skill accumulation

Dilip Mookherjee, Stefan Napel, Debraj Ray

    Research output: Contribution to journalArticlepeer-review

    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.

    Original languageEnglish (US)
    Pages (from-to)388-400
    Number of pages13
    JournalJournal of the European Economic Association
    Volume8
    Issue number2-3
    DOIs
    StatePublished - 2010

    ASJC Scopus subject areas

    • Economics, Econometrics and Finance(all)

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