Residential and Social Mobility: A Quantitative Analysis of Parental Decisions with Social Learning

Suzanne Bellue

No 26100, RFBerlin Discussion Paper Series from ROCKWOOL Foundation Berlin (RFBerlin)

Abstract: In the U.S., beliefs about parenting and parental choices differ across socioeconomic groups. This paper develops an overlapping generations model with social learning, where young adults form beliefs about parenting by observing neighbors but may make inference mistakes due to selection neglect-imperfect correction for selection. In equilibrium, residential segregation generates information frictions that foster heterogeneous beliefs and distort parenting decisions. When calibrated to the U.S., the model suggests these beliefs reduce equity and efficiency, and housing vouchers can enhance both social mobility and aggregate income. In contrast, a model that replaces beliefs with fixed preference heterogeneity predicts income losses.

Keywords: Macroeconomics; Family; Human Capital; Learning; Neighborhood (search for similar items in EconPapers)
JEL-codes: D83 J24 R20 (search for similar items in EconPapers)
Date: 2026-04
New Economics Papers: this item is included in nep-dge
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Persistent link: https://EconPapers.repec.org/RePEc:crm:wpaper:26100

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