Meritocracy and the inheritance of advantage

We present a model where more accurate information on the background of individuals facilitates statistical discrimination, increasing inequality and intergenerational persistence in income. Surprisingly, more accurate information on the actual capabilities of workers leads to the same result—firms...

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Bibliographic Details
Published in:Journal of economic growth (Boston, Mass.) Mass.), 2022-06, Vol.27 (2), p.235-272
Main Authors: Comerford, David, Rodríguez Mora, José V., Watts, Michael J.
Format: Article
Language:English
Subjects:
Ability
Discrimination
Economic Growth
Economics
Economics and Finance
Inequality
Inheritance
Intergenerational mobility
International Economics
Macroeconomics/Monetary Economics//Financial Economics
Meritocracy
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Summary:We present a model where more accurate information on the background of individuals facilitates statistical discrimination, increasing inequality and intergenerational persistence in income. Surprisingly, more accurate information on the actual capabilities of workers leads to the same result—firms give increased weight to the more accurate information, increasing inequality, which itself fosters discrimination. The rich take advantage of this through educational investments in their children, and mobility decreases as a consequence of an increase in the ability to reward talent. Using our model to interpret the data suggests that a country like the US might indeed be a land of opportunity for the sufficiently able, as conditional on ability background may have relatively little effect. Nevertheless the US has a relatively low degree of intergenerational mobility precisely because meritocracy facilitates a high correlation of ability with background.
ISSN:1381-4338
1573-7020
DOI:10.1007/s10887-021-09201-1