How Much Does Sorting Increase Inequality?

QUARTERLY JOURNAL OF ECONOMICS, Vol. 112, No. 1, February 1997

Posted: 3 Aug 1998

See all articles by Michael Kremer

Michael Kremer

Harvard University - Department of Economics; Brookings Institution; National Bureau of Economic Research (NBER); Center for Global Development; Harvard University - Harvard Kennedy School (HKS)

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Abstract

Some commentators argue that increased sorting into internally homogeneous neighborhoods, schools, and marriages is radically polarizing society. Calibration of a formal model, however, suggests that the steady-state standard deviation of education would increase only 1.7 percent if the correlation between neighbors' education doubled and would fall only 1.6 percent if educational sorting by neighborhood disappeared. The steady-state standard deviation of education would grow 1 percent if the correlation between spouses' education increased from 0.6 to 0.8. In fact, marital and neighborhood sorting have been stable or even decreasing historically. Sorting has somewhat more significant effects on intergenerational mobility than on inequality.

JEL Classification: H89, D83

Suggested Citation

Kremer, Michael R., How Much Does Sorting Increase Inequality?. QUARTERLY JOURNAL OF ECONOMICS, Vol. 112, No. 1, February 1997. Available at SSRN: https://ssrn.com/abstract=8752

Michael R. Kremer (Contact Author)

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