Sorting and Long-Run Inequality

36 Pages Posted: 5 May 2000 Last revised: 15 Oct 2010

See all articles by Raquel Fernández

Raquel Fernández

New York University - Leonard N. Stern School of Business, Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Richard Rogerson

Arizona State University (ASU) - Economics Department; National Bureau of Economic Research (NBER); Princeton University - Princeton School of Public and International Affairs

Date Written: January 2000

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, 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.

Suggested Citation

Fernández, Raquel and Rogerson, Richard, Sorting and Long-Run Inequality (January 2000). NBER Working Paper No. w7508, Available at SSRN: https://ssrn.com/abstract=218376

Raquel Fernández (Contact Author)

New York University - Leonard N. Stern School of Business, Department of Economics ( email )

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Centre for Economic Policy Research (CEPR)

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National Bureau of Economic Research (NBER)

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Richard Rogerson

Arizona State University (ASU) - Economics Department ( email )

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United States
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National Bureau of Economic Research (NBER)

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Princeton University - Princeton School of Public and International Affairs ( email )

Princeton University
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United States

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