DP2352 Sorting and Long-Run Inequality
|Author(s):||Raquel Fernández, Richard Rogerson|
|Publication Date:||January 2000|
|Keyword(s):||Fertility, Inequality, Marriage, Sorting|
|JEL(s):||D30, I20, J11|
|Programme Areas:||International Macroeconomics, Public Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=2352|
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.