Research

We present a model showing that greater accuracy in assessing individual talent can paradoxically increase income inequality and reduce intergenerational mobility. In a meritocratic system, where firms have better information about worker capabilities, firms place greater emphasis on talent, but this does not necessarily improve social mobility. Wealthier families exploit this by investing more in their children’s education, perpetuating inequality. The paper suggests that societies with higher rewards for human capital, like the U.S., may appear meritocratic but exhibit low social mobility due to the intergenerational persistence of advantage, demonstrating that both merit-based and background-based systems can produce similar outcomes in terms of inequality and mobility.

Group Effects in Metropolitan Police Stop & Search Data.