How Much Does Sorting Increase Inequality?
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NBER Working Paper No. 5566
Issued in May 1996
NBER Program(s): EFG
Social commentators from William Julius Wilson to Charles Murray have argued that increased sorting of people into internally homogeneous" neighborhoods,schools, and marriages is spurring long-run inequality. Cali- bration of a formal model suggests that these fears are misplaced. In order to increase the steady-state standard deviation of education by one percent, the correlation between neighbors' education would have to double, or the correlation between spouses' education would have to increase by one-third. In fact, both correlations have declined slightly over the past few decades. Sorting has somewhat more significant effects on intergenerational mobility than on inequality."
Published: Quarterly Journal of Economics (February 1997): 15-139.
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