Sorting and Long-Run Inequality

Raquel Fernandez and Richard Rogerson

No 7508, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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.

JEL-codes: D3 I2 (search for similar items in EconPapers)
Date: 2000-01
New Economics Papers: this item is included in nep-dge
Note: EFG LS
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Citations: View citations in EconPapers (5)

Published as Fernandez, Raquel and Richard Rogerson. "Sorting And Long-Run Inequality," Quarterly Journal of Economics, 2001, v116(4,Nov), 1305-1341.

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