Intergenerational mobility and unequal school opportunity

Abstract

We analyse the impact of unequal school opportunity on intergenerational income mobility and human capital accumulation. Building upon the classical Becker-Tomes-Solon framework, we use a regime-switch model allowing for differences in income transmission across groups. We find that unequal school opportunity raises average human capital because of assortative matching. However, because income dispersion tends to be higher at the top, in most cases unequal school opportunity decreases intergenerational mobility. Calibrating the model to the US, simulations suggest that school equalization and de-segregation policies have positive effects on mobility at relatively small efficiency costs.