Sorting and long-run inequality

Raquel Fernández, Richard Rogerson

    Research output: Contribution to journalArticle

    Abstract

    Many social commentators have raised concerns over the possibility that increased sorting in society may 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. We find that increased sorting will significantly increase income inequality. Four factors are important to our findings: a negative correlation between fertility and education, a decreasing marginal effect of parental education on children's years of education, wages that are sensitive to the relative supply of skilled workers, and borrowing constraints that affect educational attainment for some low-income households.

    Original languageEnglish (US)
    Pages (from-to)1305-1341
    Number of pages37
    JournalQuarterly Journal of Economics
    Volume116
    Issue number4
    DOIs
    StatePublished - Nov 2001

    ASJC Scopus subject areas

    • Economics and Econometrics

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