Heterogeneity, Stratification and Growth

Roland Benabou

No 815, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper examines how economic stratification affects inequality and growth over time. It studies economies where heterogenous agents interact through local public goods or externalities (school funding, neighbourhood effects) and economy-wide linkages (complementary skills, knowledge spillovers). It compares 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 trade-off: mixing leads to slower growth in the short run, but to higher output or even productivity growth in the long run. This trade-off occurs in particular when comparing local and national funding of education, which correspond to special cases of segregation and integration. More generally, the paper identifies 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.

Keywords: Education; Externalities; Growth; Human Capital; Inequality; Stratification (search for similar items in EconPapers)
JEL-codes: D26 I21 J24 O41 (search for similar items in EconPapers)
Date: 1993-08
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=815 (application/pdf)

Related works:
Working Paper: Heterogeneity, Stratification, and Growth (1993)
Working Paper: Heterogeneity, Stratification, and Growth (1992)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:815

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... pers/dp.php?dpno=815

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().