Economics Of Discrimination

This paper describes the correlations between inequality and the growth rates in cross-country data. Using non-parametric methods, we show that the growth rate is an inverted U-shaped function of net changes in inequality: Changes in inequality (in any direction) are associated with reduced growth in the next period. The estimated relationship is robust to variations in control variables and estimation methods. This inverted U-curve is consistent with a simple political economy model, although, as we point out, efforts to interpret this model causally run into difficult identification problems. We show that this non-linearity is sufficient to explain why previous estimates of the relationship between the level of inequality and growth are so different from one another.

Inequality and Growth: What Can the Data Say?

International surveys reveal wide differences between the views held in different countries concerning the causes of wealth or poverty and the extent to which people are responsible for their own fate. At the same time, social ethnographies and experiments by psychologists demonstrate individuals' recurrent struggle with cognitive dissonance as they seek to maintain, and pass on to their children, a view of the world where effort ultimately pays off and everyone gets their just deserts. This paper offers a model that helps explain: i) why most people feel such a need to believe in a “just world”; ii) why this need, and therefore the prevalence of the belief, varies considerably across countries; iii) the implications of this phenomenon for international differences in political ideology, levels of redistribution, labor supply, aggregate income, and popular perceptions of the poor. The model shows in particular how complementarities arise endogenously between individuals' desired beliefs or ideological choices, resulting in two equilibria. A first, “American” equilibrium is characterized by a high prevalence of just-world beliefs among the population and relatively laissez-faire policies. The other, “European” equilibrium is characterized by more pessimism about the role of effort in economic outcomes and a more extensive welfare state. More generally, the paper develops a theory of collective beliefs and motivated cognitions, including those concerning “money” (consumption) and happiness, as well as religion.

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Belief in a Just World and Redistributive Politics

Ethnic Identity: The Transformation of White America

Developments in methodologies, agglomeration, and a range of applied issues have characterized recent advances in regional and urban studies. Volume 5 concentrates on these developments while treating traditional subjects such as housing, the costs and benefits of cities, and policy issues beyond regional inequalities. Contributors make a habit of combining theory and empirics in each chapter, guiding research amid a trend in applied economics towards structural and quasi-experimental approaches. Clearly distinguished from the New Economic Geography covered by Volume 4, these articles feature an international approach that positions recent advances within the discipline of economics and society at large. * Editors are recognized as leaders and can attract an international list of contributors* Regional and urban studies interest economists in many subdisciplines, such as labor, development, and public economics* Table of contents combines theoretical and applied subjects, ensuring broad appeal to readers

Handbook of regional and urban economics

Cultural Dynamics, Social Mobility and Urban Segregation

We develop a new model of a "featureful" city in which locations are differentiated by two attributes, that is, the distance to employment centers and the accessibility to given amenities, and we show how heterogeneous households in income are sorted out across the urban space. Under Stone-Geary preferences, the spatial income distribution is governed by a location-quality index which reflects the interaction between the amenity and commuting cost functions. The residential equilibrium typically involves the spatial separation of households sharing similar incomes. Using data on Dutch cities, we show that there is a causal relationship between the amenity level and consumer income, suggesting that richer households sort themselves into high amenity locations. We do not find strong evidence that employment accessibility leads to income segregation, suggesting that the standard monocentric city model without amenities is a poor predictor of the social structure of cities.

Amenities and the Social Structure of Cities

Inequality and club formation

This paper develops the idea that conspicuous consumption has an impact on social segmentation, i.e., on the partition of the society into communities. Even though agents do not value conspicuous goods per se, they are competing in a signalling race in order to benefit from social interactions within a community. First, we study the equilibria of this model defining the optimal strategies and the equilibrium partition that characterizes pooling and separating equilibria. In a second step, as conspicuous consumption is a pure waste of money, we study a possible Pareto–improving taxation policy.

Conspicuous Consumption and Social Segmentation

We study the sorting of income-heterogeneous consumers within cities. We allow for non-homothetic preferences and locations that are differentiated by their distance to employment centers and accessibility to exogenous amenities. The residential equilibrium is driven by the properties of an amenity-commuting aggregator obtained from the primitives of the model. Using micro-data on the Randstad (the Netherlands), we find that doubling the amenity level, resp. commuting time, attracts households whose incomes are 1 -2:5% higher, resp. 6 - 17:5% lower. Using the model's estimated parameters, we predict the impact of changes in accessibility to jobs and amenities on the social structure of the Randstad.

Fabien Moizeau

Papers

Cultural Dynamics, Social Mobility and Urban Segregation

Amenities and the Social Structure of Cities

Inequality and club formation

Conspicuous Consumption and Social Segmentation

Who Lives Where in the City? Amenities, Commuting and Income Sorting