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Stratification, social networks in the labour market, and intergenerational mobility

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Author

Summary, in English

Young individuals, taking the locational choices made by their altruistic parents as given, decide whether or not to acquire skills. The use of location-specific word-of-mouth communication in the transmission of information about (skilled) job opportunities implies that the local social environment partly determines an individual's expected returns to education. Stratified equilibria, when they exist, are characterised by low intergenerational social mobility and inefficient use of talent. In addition, the equilibrium responses to factors that generally encourage education may, in stratified outcomes, be highly asymmetric across socio-economic groups. Non-stratified equilibria are likely to be destabilised by measures that encourage education.

Publishing year

2007

Language

English

Pages

782-812

Publication/Series

Economic Journal

Volume

117

Issue

520

Document type

Journal article

Publisher

Wiley-Blackwell

Topic

  • Economics

Status

Published

ISBN/ISSN/Other

  • ISSN: 1468-0297