NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Heterogeneity, Stratification, and Growth

Roland Benabou

NBER Working Paper No. 4311 (Also Reprint No. r2076)
Issued in April 1993
NBER Program(s):   EFG

We examine how economic stratification affects inequality and growth over time. We study economies where heterogenous agents interact through local public goods or externalities (school funding, neighborhood effects) and economy-wide linkages (complementary skills. knowledge spillovers). We compare 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 tradeoff: mixing leads to slower growth in the short run, but to higher output or even productivity growth in the long run. This tradeoff occurs in particular when comparing local and national funding of education, which correspond to special cases of segregation and integration. More generally, we identify 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.

download in pdf format
   (1241 K)

email paper

This paper is available as PDF (1241 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w4311

Published: modified title: "Heterogeneity, Stratification and Growth: Macroeconomicmplications of Community Structure and School Finance," American Economic Review, vol. 86, no. 3, pp. 584-609, June 1996.

Users who downloaded this paper also downloaded these:
Benabou Inequality and Growth
Benabou w4798 Education, Income Distribution and Growth: The Local Connection
Persson and Tabellini w3599 Is Inequality Harmful for Growth? Theory and Evidence
Benabou w5658 Inequality and Growth
Manski w7580 Economic Analysis of Social Interactions
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us