Measuring the Average Outcome and Inequality Effects of Segregation in the Presence of Social Spillovers



In this paper we provide a nonparametric treatment of identification in models with social spillovers. We consider a setting with ‘high’ and ‘low’ type individuals. Individual outcomes depend upon the fraction of high types in one’s group. We refer to this dependence as a social spillover or peer group effect. We define estimands measuring local and global spillover strength as well as the outcome and inequality effects of increasing segregation (by type) across groups. We relate our estimands to the theory of sorting in the presence of social externalities.

Last updated on 07/06/2012