publication . Article . 1996

Heterogeneity, Stratification, and Growth: Macroeconomic Implications of Community Structure and School Finance.

Benabou, Roland;
Open Access
  • Published: 01 Jan 1996 Journal: American Economic Review, volume 86, issue 3 June, pages 584-609
Abstract
This paper examines how socioeconomic stratification and alternative systems of education finance affect inequality and growth. Agents interact through local public goods or externalities (school funding, neighborhood effects) and economywide linkages (complementary skills, knowledge spillovers). Sorting families into homogeneous communities often minimizes the costs of existing heterogeneity but mixing reduces heterogeneity faster. Integration, therefore, tends to slow down growth in the short run yet raise it in the long run. A move to state funding of education presents society with a similar intertemporal trade-off. Local and global complementarities play ma...
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