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Group Inequality

Author

Listed:
  • Samuel Bowles

    (Santa Fe Institute and University of Siena)

  • Glenn C. Loury

    (Department of Economics, Brown University)

  • Rajiv Sethi

    (Department of Economics, Barnard College, Columbia University and the Institute for Advanced Study)

Abstract

This paper explores conditions under which inequality across social groups can emerge from initially group-egalitarian distributions and persist across generations despite equality of eco- nomic opportunity. These conditions arise from interactions among three factors: the extent of segregation in social networks, the strength of interpersonal spillovers in human capital accumu- lation, and the responsiveness of relative wages to the skill composition in production. Social segregation is critical in generating these results: group inequality cannot emerge or persist un- der conditions of equal opportunity unless segregation su¢ ciently great. We also show that if an initially disadvantaged group is su¢ ciently small, integration above a threshold level can induce both groups to invest more in human capital, while the opposite holds if the disadvantaged group is large.

Suggested Citation

  • Samuel Bowles & Glenn C. Loury & Rajiv Sethi, 2009. "Group Inequality," Economics Working Papers 0088, Institute for Advanced Study, School of Social Science.
    • Handle: RePEc:ads:wpaper:0088
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    More about this item

    Keywords

    segregation; networks; group inequality; human capital;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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