Sorting and Long-Run Inequality

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, feitility, and marital sorting and parameteiize the steady state to match several basic empirical findings. Contraiyto 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 conelation 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.

Income Inequality and Political Polarization: Time Series Evidence Over Nine Decades

“…Other, less technological changes-depicted in the box at the far right-have also contributed to increased inequality and political polarization. Shifts in demographic patterns, such as the more asymmetric sorting of people into pairs of highly educated couples have contributed to a less even distribution of income across families (e.g., Fernandez and Rogerson, 2001) and have reduced a sense of common political interests, possibly contributing to increased political polarization (see Mann and Ornstein, 2012, inter alia). In recent decades there has even been a shift to more income segregation across neighborhoods (Watson, 2009;Taylor and Fry, 2012) which may further reduce common interests.…”

Inequality, Human Capital Formation, and the Process of Development

“…10 The interplay between income inequality and equality of opportunities that has been underlined by Galor and Zeira led to an additional strand of research within the credit market imperfection approach. This research examines the e¤ect of inequality on the degree of intergenerational mobility and thus the e¢ ciency in the allocation of talents across occupations (Fershtman et al, 1996;Owen and Weil, 1998;Maoz and Moav, 1999;Checchi et al, 1999; adverse e¤ect is still maintained due to the di¤erential e¤ect of inequality on: (i) the importance of forgone earnings in education decisions, (ii) the allocation of parental inputs in the production of the children's human capital (Galor and Tsiddon, 1997b), (iii) the ability of parents to optimally select the schooling environment for their children (Benabou, 1996;Durlauf, 1996a;Fernández and Rogerson, 1996), and (iv) assortative mating (Fernández and Rogerson, 2001;Fernandez et al, 2005). Moreover, it should be noted that while the positive e¤ect of wage inequality on the incentive to invest in human capital may counterbalance the adverse e¤ect of limited parental resources on investment in human capital in the lower tail of the income distribution, other forms of inequality (e.g., wealth inequality and inequality in the distribution of income between capital, land and labor) do not a¤ect the incentive to invest in human capital.…”

More on Marriage, Fertility and the Distribution of Income

“…In general, it is not. 23 Fernandez and Rogerson (2001) study the relationship between marital sorting and inequality. In their work, agents are exogenously married according to some probability structure that depends on their type.…”