Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/284779 
Year of Publication: 
2021
Citation: 
[Journal:] Journal of Public Economic Theory [ISSN:] 1467-9779 [Volume:] 23 [Issue:] 5 [Year:] 2021 [Pages:] 801-821
Publisher: 
Wiley, Hoboken, NJ
Abstract: 
Why is an increase in income inequality often accompanied by an increase in socioeconomic segregation? And what are the welfare implications of this comovement? This paper uses a theoretical model to analyze the relationship between income inequality and socioeconomic segregation. It shows that rising inequality can trigger sorting according to income, as a monopolist's profits from offering sorting increase with income inequality. It also examines the relationship between sorting and social welfare and shows that profit‐maximizing sorting patterns are not necessarily optimal from a welfare perspective. In fact, for a broad field of income distributions (monopolist) profits increase with inequality, while at the same time total welfare from sorting decreases.
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Article
Document Version: 
Published Version

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