Associational redistribution: A defense

Politics and Society

Volumn 24, Issue 4, 1996, Pages 391-410

  Durlauf, Steven N ^a  

^a NONE

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[No Author keywords available]

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EID: 0030300565     PISSN: 00323292     EISSN: None     Source Type: Journal    
DOI: 10.1177/0032329296024004008     Document Type: Review

References (57)

1. An alternative argument suggesting a negative relationship between inequality and productivity has been made by Kevin Murphy, Andrei Shleifer, and Robert Vishny, "Income Distribution, Market Size, and Industrialization," Quarterly Journal of Economics 104 (1989): 537-64, who show that high degrees of inequality can lead to a demand structure inconsistent with high production.
2. Samuel Bowles and Herbert Gintis, "Escaping the Efficiency-Equity Tradeoff: Productivity Enhancing Asset Redistributions," (Department of Economics, University of Massachusetts at Amherst, 1994, mimeographed).
3. Roland Bénabou, "Workings of a City: Location Education and Production," Quarterly Journal of Economics 108 (1993): 619-52, "Equity and Efficiency in Human Capital Investment: The Local Connection," Review of Economic Studies, 62 (1996): 237-64, and "Heterogeneity, Stratification, and Growth: Macroeconomic Implications of Community Structure and Educational Finance," American Economic Review 86 (1996): 584-609. Steven Durlauf, "A Theory of Persistent Income Inequality," Journal of Economic Growth 1 (1996): 75-93, "Neighborhood Feedbacks, Endogenous Stratification, and Income Inequality," in Dynamic Disequilibrium Modelling, ed. W. Barnett, G. Gandolfo, and C. Hillinger (Cambridge, UK: Cambridge University Press, 1996), and "Sorting, Stratification and Efficiency," (University of Wisconsin, 1996, mimeographed). Michael Kremer and Eric Maskin, "Segregation by Skill and the Rise in Inequality," (Massachusetts Institute of Technology, 1995, mimeographed). Shelly Lundberg and Richard Startz, "On the Persistence of Racial Inequality" (University of Washington, Seattle, 1993, mimeographed).
4. Roland Bénabou, "Workings of a City: Location Education and Production," Quarterly Journal of Economics 108 (1993): 619-52, "Equity and Efficiency in Human Capital Investment: The Local Connection," Review of Economic Studies, 62 (1996): 237-64, and "Heterogeneity, Stratification, and Growth: Macroeconomic Implications of Community Structure and Educational Finance," American Economic Review 86 (1996): 584-609. Steven Durlauf, "A Theory of Persistent Income Inequality," Journal of Economic Growth 1 (1996): 75-93, "Neighborhood Feedbacks, Endogenous Stratification, and Income Inequality," in Dynamic Disequilibrium Modelling, ed. W. Barnett, G. Gandolfo, and C. Hillinger (Cambridge, UK: Cambridge University Press, 1996), and "Sorting, Stratification and Efficiency," (University of Wisconsin, 1996, mimeographed). Michael Kremer and Eric Maskin, "Segregation by Skill and the Rise in Inequality," (Massachusetts Institute of Technology, 1995, mimeographed). Shelly Lundberg and Richard Startz, "On the Persistence of Racial Inequality" (University of Washington, Seattle, 1993, mimeographed).
5. Roland Bénabou, "Workings of a City: Location Education and Production," Quarterly Journal of Economics 108 (1993): 619-52, "Equity and Efficiency in Human Capital Investment: The Local Connection," Review of Economic Studies, 62 (1996): 237-64, and "Heterogeneity, Stratification, and Growth: Macroeconomic Implications of Community Structure and Educational Finance," American Economic Review 86 (1996): 584-609. Steven Durlauf, "A Theory of Persistent Income Inequality," Journal of Economic Growth 1 (1996): 75-93, "Neighborhood Feedbacks, Endogenous Stratification, and Income Inequality," in Dynamic Disequilibrium Modelling, ed. W. Barnett, G. Gandolfo, and C. Hillinger (Cambridge, UK: Cambridge University Press, 1996), and "Sorting, Stratification and Efficiency," (University of Wisconsin, 1996, mimeographed). Michael Kremer and Eric Maskin, "Segregation by Skill and the Rise in Inequality," (Massachusetts Institute of Technology, 1995, mimeographed). Shelly Lundberg and Richard Startz, "On the Persistence of Racial Inequality" (University of Washington, Seattle, 1993, mimeographed).
6. Roland Bénabou, "Workings of a City: Location Education and Production," Quarterly Journal of Economics 108 (1993): 619-52, "Equity and Efficiency in Human Capital Investment: The Local Connection," Review of Economic Studies, 62 (1996): 237-64, and "Heterogeneity, Stratification, and Growth: Macroeconomic Implications of Community Structure and Educational Finance," American Economic Review 86 (1996): 584-609. Steven Durlauf, "A Theory of Persistent Income Inequality," Journal of Economic Growth 1 (1996): 75-93, "Neighborhood Feedbacks, Endogenous Stratification, and Income Inequality," in Dynamic Disequilibrium Modelling, ed. W. Barnett, G. Gandolfo, and C. Hillinger (Cambridge, UK: Cambridge University Press, 1996), and "Sorting, Stratification and Efficiency," (University of Wisconsin, 1996, mimeographed). Michael Kremer and Eric Maskin, "Segregation by Skill and the Rise in Inequality," (Massachusetts Institute of Technology, 1995, mimeographed). Shelly Lundberg and Richard Startz, "On the Persistence of Racial Inequality" (University of Washington, Seattle, 1993, mimeographed).
7. Roland Bénabou, "Workings of a City: Location Education and Production," Quarterly Journal of Economics 108 (1993): 619-52, "Equity and Efficiency in Human Capital Investment: The Local Connection," Review of Economic Studies, 62 (1996): 237-64, and "Heterogeneity, Stratification, and Growth: Macroeconomic Implications of Community Structure and Educational Finance," American Economic Review 86 (1996): 584-609. Steven Durlauf, "A Theory of Persistent Income Inequality," Journal of Economic Growth 1 (1996): 75-93, "Neighborhood Feedbacks, Endogenous Stratification, and Income Inequality," in Dynamic Disequilibrium Modelling, ed. W. Barnett, G. Gandolfo, and C. Hillinger (Cambridge, UK: Cambridge University Press, 1996), and "Sorting, Stratification and Efficiency," (University of Wisconsin, 1996, mimeographed). Michael Kremer and Eric Maskin, "Segregation by Skill and the Rise in Inequality," (Massachusetts Institute of Technology, 1995, mimeographed). Shelly Lundberg and Richard Startz, "On the Persistence of Racial Inequality" (University of Washington, Seattle, 1993, mimeographed).
8. Roland Bénabou, "Workings of a City: Location Education and Production," Quarterly Journal of Economics 108 (1993): 619-52, "Equity and Efficiency in Human Capital Investment: The Local Connection," Review of Economic Studies, 62 (1996): 237-64, and "Heterogeneity, Stratification, and Growth: Macroeconomic Implications of Community Structure and Educational Finance," American Economic Review 86 (1996): 584-609. Steven Durlauf, "A Theory of Persistent Income Inequality," Journal of Economic Growth 1 (1996): 75-93, "Neighborhood Feedbacks, Endogenous Stratification, and Income Inequality," in Dynamic Disequilibrium Modelling, ed. W. Barnett, G. Gandolfo, and C. Hillinger (Cambridge, UK: Cambridge University Press, 1996), and "Sorting, Stratification and Efficiency," (University of Wisconsin, 1996, mimeographed). Michael Kremer and Eric Maskin, "Segregation by Skill and the Rise in Inequality," (Massachusetts Institute of Technology, 1995, mimeographed). Shelly Lundberg and Richard Startz, "On the Persistence of Racial Inequality" (University of Washington, Seattle, 1993, mimeographed).
9. Roland Bénabou, "Workings of a City: Location Education and Production," Quarterly Journal of Economics 108 (1993): 619-52, "Equity and Efficiency in Human Capital Investment: The Local Connection," Review of Economic Studies, 62 (1996): 237-64, and "Heterogeneity, Stratification, and Growth: Macroeconomic Implications of Community Structure and Educational Finance," American Economic Review 86 (1996): 584-609. Steven Durlauf, "A Theory of Persistent Income Inequality," Journal of Economic Growth 1 (1996): 75-93, "Neighborhood Feedbacks, Endogenous Stratification, and Income Inequality," in Dynamic Disequilibrium Modelling, ed. W. Barnett, G. Gandolfo, and C. Hillinger (Cambridge, UK: Cambridge University Press, 1996), and "Sorting, Stratification and Efficiency," (University of Wisconsin, 1996, mimeographed). Michael Kremer and Eric Maskin, "Segregation by Skill and the Rise in Inequality," (Massachusetts Institute of Technology, 1995, mimeographed). Shelly Lundberg and Richard Startz, "On the Persistence of Racial Inequality" (University of Washington, Seattle, 1993, mimeographed).
10. Roland Bénabou, "Workings of a City: Location Education and Production," Quarterly Journal of Economics 108 (1993): 619-52, "Equity and Efficiency in Human Capital Investment: The Local Connection," Review of Economic Studies, 62 (1996): 237-64, and "Heterogeneity, Stratification, and Growth: Macroeconomic Implications of Community Structure and Educational Finance," American Economic Review 86 (1996): 584-609. Steven Durlauf, "A Theory of Persistent Income Inequality," Journal of Economic Growth 1 (1996): 75-93, "Neighborhood Feedbacks, Endogenous Stratification, and Income Inequality," in Dynamic Disequilibrium Modelling, ed. W. Barnett, G. Gandolfo, and C. Hillinger (Cambridge, UK: Cambridge University Press, 1996), and "Sorting, Stratification and Efficiency," (University of Wisconsin, 1996, mimeographed). Michael Kremer and Eric Maskin, "Segregation by Skill and the Rise in Inequality," (Massachusetts Institute of Technology, 1995, mimeographed). Shelly Lundberg and Richard Startz, "On the Persistence of Racial Inequality" (University of Washington, Seattle, 1993, mimeographed).
11. Glenn Loury, "A Dynamic Theory of Racial Income Differences," in Women Minorities and Employment Discrimination, ed. P. Wallace and A. LaMond (Lexington, MA: Lexington Books, 1977).
12. James Coleman, Foundations of Social Theory (Cambridge, MA: Harvard University Press, 1990), 300.
13. Steven Durlauf, "Neighborhood Feedbacks, Endogenous Stratification, and Income Inequality," (1996).
14. Jonathan Crane, "The Epidemic Theory of Ghettos and Neighborhood Effects on Dropping Out and Teenage Childbearing," American Journal of Sociology 96 (1991): 1226-59.
15. Mary Corcoran et al., "Effects of Family and Community Background on Men's Economic Status," NBER Working Paper no. 2896, 1989.
16. Linda Datcher, "Effects of Community and Family Background on Achievement," Review of Economics and Statistics 64 (1982): 32-41.
17. James Rosenbaum and Susan Popkin, "Employment and Earnings of Low-Income Blacks Who Move to Middle Class Suburbs," in The Urban Underclass, ed. C. Jencks and P. Peterson (Washington, DC: Brookings Institution, 1991).
18. Charles Manski, "Identification Problems in the Social Sciences," in Sociological Methodology 23, ed. P. Marsden (Cambridge: Basil Blackwell, 1993); "Identification of Endogenous Social Effects: The Reflection Problem," Review of Economic Studies 60 (1993): 531-42.
19. Charles Manski, "Identification Problems in the Social Sciences," in Sociological Methodology 23, ed. P. Marsden (Cambridge: Basil Blackwell, 1993); "Identification of Endogenous Social Effects: The Reflection Problem," Review of Economic Studies 60 (1993): 531-42.
20. Christopher Jencks and Susan Mayer, "The Social Consequences of Growing Up in a Poor Neighborhood," in Inner-City Poverty in the United States, ed. L. Lynn and M. McGreary (Washington, DC: National Academy Press, 1990).
21. A great deal of empirical controversy exists over the effects of increased capital spending on educational and economic outcomes. Without assessing the controversy, it seems fair to say that a possible explanation of the lack of strong empirical evidence for these links is the failure of the relevant empirical work to adequately control for social capital effects. At a minimum, it is simple to choose parameterizations of equations (1) to (4) in Appendix 1 such that educational expenditures have significant human capital effects that become unobservable due to their interaction with social capital levels.
22. Gary Becker, "A Theory of Marriage: Part I," Journal of Political Economy 81 (1973): 813-46; Michael Kremer, "The O-Ring Theory of Economic Development," Quarterly Journal of Economics 108 (1993): 551-75.
23. Gary Becker, "A Theory of Marriage: Part I," Journal of Political Economy 81 (1973): 813-46; Michael Kremer, "The O-Ring Theory of Economic Development," Quarterly Journal of Economics 108 (1993): 551-75.
24. Durlauf, "Sorting."
25. See Shelly Lundberg and Richard Startz, "Private Discrimination and Social Intervention in Competitive Labor Markets," American Economic Review 73 (1983): 340-7, for an alternative perspective on the efficiency gains from affirmative action policies that alter equilibrium labor market allocation based on the effects of imperfect information on hiring decisions.
26. William Brock and Steven Durlauf, "Discrete Choice with Social Interactions I: Theory" (Department of Economics, University of Wisconsin, 1995, mimeograph).
27. Bénabou, "Heterogeneity."
28. Again, it is important to emphasize that efficiency is being equated with maximization of per capita payoffs, which is different from the usual procedure in economics of equating efficiency with Pareto Optimality. The integrated allocation does not Pareto dominate the stratified allocation for either of the payoff functions I consider, because the high ability agents are made worse off in both cases by integration.
29. For example, no market exists to compensate good role models and thereby induce their efficient allocation across neighborhoods.
30. Douglas Massey and Shawn Kanaiaupuni, "Public Housing and the Concentration of Poverty," Social Science Quarterly 74 (1993): 109-22, illustrate how the location strategy for public housing projects in Chicago since 1950 has been a contributing factor to the concentration of poverty within the inner city. The contribution of government policies in explaining the current level of residential racial segregation in the United States is explored by Douglas Massey and Nancy Denton, American Apartheid (Cambridge: Harvard University Press, 1993).
31. Douglas Massey and Shawn Kanaiaupuni, "Public Housing and the Concentration of Poverty," Social Science Quarterly 74 (1993): 109-22, illustrate how the location strategy for public housing projects in Chicago since 1950 has been a contributing factor to the concentration of poverty within the inner city. The contribution of government policies in explaining the current level of residential racial segregation in the United States is explored by Douglas Massey and Nancy Denton, American Apartheid (Cambridge: Harvard University Press, 1993).
32. This possibility is explicitly recognized by Glenn Loury, "Why Should We Care About Group Inequality?" Social Philosophy and Policy 5 (1987): 249-71; "The Economics of Discrimination: Getting to the Core of the Problem," Harvard Journal of African American Public Policy 1 (1992): 91-110. Unlike the present discussion, though, Loury focuses on the role of social capital in perpetuating inequality, rather than on productivity issues. One aspect of these spillovers, role model effects, figured in the defense of affirmative action argued on behalf of the University of California, Davis, in the Bakke case, which led to the Supreme Court rejecting numerical quotas as unconstitutional as discussed by Ronald Dworkin, A Matter of Principle (Cambridge: Harvard University Press, 1985).
33. This possibility is explicitly recognized by Glenn Loury, "Why Should We Care About Group Inequality?" Social Philosophy and Policy 5 (1987): 249-71; "The Economics of Discrimination: Getting to the Core of the Problem," Harvard Journal of African American Public Policy 1 (1992): 91-110. Unlike the present discussion, though, Loury focuses on the role of social capital in perpetuating inequality, rather than on productivity issues. One aspect of these spillovers, role model effects, figured in the defense of affirmative action argued on behalf of the University of California, Davis, in the Bakke case, which led to the Supreme Court rejecting numerical quotas as unconstitutional as discussed by Ronald Dworkin, A Matter of Principle (Cambridge: Harvard University Press, 1985).
34. This possibility is explicitly recognized by Glenn Loury, "Why Should We Care About Group Inequality?" Social Philosophy and Policy 5 (1987): 249-71; "The Economics of Discrimination: Getting to the Core of the Problem," Harvard Journal of African American Public Policy 1 (1992): 91-110. Unlike the present discussion, though, Loury focuses on the role of social capital in perpetuating inequality, rather than on productivity issues. One aspect of these spillovers, role model effects, figured in the defense of affirmative action argued on behalf of the University of California, Davis, in the Bakke case, which led to the Supreme Court rejecting numerical quotas as unconstitutional as discussed by Ronald Dworkin, A Matter of Principle (Cambridge: Harvard University Press, 1985).
35. Stephen Coate and Glenn Loury, "Will Affirmative Action Policies Eliminate Negative Stereotypes?" American Economic Review 83 (1993): 1220-40; Glenn Loury, "Conceptual Problems in the Enforcement of Antidiscrimination Laws" (Department of Economics, Boston University, 1995, mimeograph).
36. Stephen Coate and Glenn Loury, "Will Affirmative Action Policies Eliminate Negative Stereotypes?" American Economic Review 83 (1993): 1220-40; Glenn Loury, "Conceptual Problems in the Enforcement of Antidiscrimination Laws" (Department of Economics, Boston University, 1995, mimeograph).
37. Ellis Cose, Rage of a Privileged Class (New York: Harper Collins, 1993).
38. Loury, "Conceptual Problems."
39. Erik Wright (private communication) has suggested that the creation of additional slots in organizations such as schools through redistributive tax policies can overcome the indivisibility aspect of associational redistribution.
40. Sidney Verba et al., Elites and the Idea of Inequality (Cambridge: Harvard University Press, 1987).
41. John Roemer, "A Pragmatic Theory of Responsibility for the Egalitarian Planner," Philosophy and Public Affairs 22 (1993): 146-66; "Equality of Opportunity: Theory and Examples" (Department of Economics, University of California at Davis, 1995, mimeograph); "Equality of Opportunity and Affirmative Action" (Department of Economics, University of California at Davis, 1995, mimeograph).
42. John Roemer, "A Pragmatic Theory of Responsibility for the Egalitarian Planner," Philosophy and Public Affairs 22 (1993): 146-66; "Equality of Opportunity: Theory and Examples" (Department of Economics, University of California at Davis, 1995, mimeograph); "Equality of Opportunity and Affirmative Action" (Department of Economics, University of California at Davis, 1995, mimeograph).
43. John Roemer, "A Pragmatic Theory of Responsibility for the Egalitarian Planner," Philosophy and Public Affairs 22 (1993): 146-66; "Equality of Opportunity: Theory and Examples" (Department of Economics, University of California at Davis, 1995, mimeograph); "Equality of Opportunity and Affirmative Action" (Department of Economics, University of California at Davis, 1995, mimeograph).
44. The failure to consider the specific mechanism by which ability differences are translated into income differences indicates the vacuousness of the apparent view of Richard Herrnstein and Charles Murray, The Bell Curve (New York: Free Press, 1994), that a society that rewards the more able over the less able is somehow self-evidently just. If the entire GNP in the United States were annually rewarded to the citizen with the highest recorded IQ, the resulting distribution would be putatively meritocratic, though obviously indefensible.
45. Loury, "Why Should We Care?"
46. Andrew Bernard and Steven Durlauf, "Interpreting Tests of the Convergence Hypothesis," Journal of Econometrics 71 (1996): 161-74.
47. John Rawls, A Theory of Justice (Cambridge: Harvard University Press, 1971).
48. This argument is inspired by Thomas Nagel, "The Policy of Preference," in Mortal Questions (Cambridge: Cambridge University Press, 1979).
49. Robert Frank and Philip Cook, The Winner-Take-All Society (New York: Free Press, 1995).
50. Robert Amdur, "Compensatory Justice: The Question of Costs," Political Theory 7 (1979): 229-44; Roemer, "Equality of Opportunity"; Roemer, "Equality of Opportunity and Affirmative Action."
51. Robert Amdur, "Compensatory Justice: The Question of Costs," Political Theory 7 (1979): 229-44; Roemer, "Equality of Opportunity"; Roemer, "Equality of Opportunity and Affirmative Action."
52. Robert Amdur, "Compensatory Justice: The Question of Costs," Political Theory 7 (1979): 229-44; Roemer, "Equality of Opportunity"; Roemer, "Equality of Opportunity and Affirmative Action."
53. Robert Nozick, Anarchy, State, and Utopia (New York: Basic Books, 1974).
54. This line of reasoning followed here and below is supported by the brilliant critique of Nozick developed by Gerald A. Cohen, Self-Ownership, Freedom, and Inequality (Princeton, NJ: Princeton University Press, 1995). In particular, Cohen gives a broad defense of government interventions to alter private market-determined income distributions based on the argument that a set of individual economic transactions, each voluntary and putatively just, can lead to an unjust outcome due to interaction effects. The interaction effects discussed in the present article are a clear example of this phenomenon.
55. Judith Shklar, American Citizenship (Cambridge: Harvard University Press, 1991).
56. Thomas Nagel, "Equality," in Mortal Questions.
57. Michael Walzer, Spheres of Justice (New York: Basic Books, 1983). Walzer specifically argues that self-realization is too closely connected to the objects of associational redistribution to justify these policies, but such an argument is powerful only to the extent it is the "essential" person who is under discussion. I believe John Roemer would disagree with my assessment of the role of genetic endowment in what constitutes an essential person, from the perspective of labor market outcomes.