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We develop a new model of a "featureful" city in which locations are di¤erentiated by two attributes, that is, the distance to employment centers and the accessibility to given amenities. The residential equilibrium involves the spatial separation of households sharing similar incomes. Under Stone-Geary preferences, amenities and commuting are subsumed into a location-quality index. Hence, the assignment of households to locations becomes one-dimensional. Since residential choices are driven by the location-quality index, the income mapping may be fully characterized. Using a rich micro-dataset on the Netherlands, we show that household income sorting is indeed driven by amenities and commuting times.

The non-convergence of the growth processes is a well-established yet puzzling fact. In this paper, we o®er a theoretical investigation of this feature, based on coalition theory and a simple model of endogenous growth. We prove that inequality generates a permanent segmentation of society into growth clubs. We then study the relationship between the distribution of individual endowments and the entire pattern of growth of these clubs. We relate the characteristics of the divergence process to the characteristics of this distribution and we prove that in most cases, an increase in inequality increases divergence in growth rates.

In this paper, we investigate the link between the dynamics of society segmentation into communities and the growth process, based on a simple human capital growth model. Using coalition theory, we study the socioeconomic dynamics of an economy over time, characterize it and prove that the economy converges to a steady state partition that may be segmented. Eventually the whole economy tends to a balanced growth path, exhibiting persistent inequality in the case of segmentation. We then provide sufficient conditions on initial inequality and the technology parameters generating local and global externalities for obtaining a segmented society in the long run. On the whole, the relationship between inequality and growth cannot be assessed without taking into consideration the stratification phenomena at work in society over time. Copyright � 2009 Wiley Periodicals, Inc..