UC Irvine

This dissertation discusses some of the causes and consequences of inequality, vertical and horizontal, some theoretically and others empirically. In doing so, I try to touch upon old and new themes in the economics literature, as old as rent seeking and as new as the effect of cultural norms.

The first essay reflects on the inequality of opportunity as manifest in the quality of education available to families in India. The paper explores the relative roles of the quality of schools and household attributes on a household’s choice of school in India. I find that income is the most important predictor of a household’s choice of school, with a doubling of per capita income increasing the likelihood of choosing a private school over a public school by 10 percentage points. Public schools can rarely compete with private schools even with comparable infrastructure and free school supplies. As incomes rise (India’s GDP has nearly doubled in the last 10 years), it is reasonable to expect that there will be de facto higher demand for private schooling and not public.

The second essay is a theoretical examination of inequality-generating rent seeking and the feedback mechanism between the two. In this paper, I model rent seeking in an unequal endowment economy to analyze the conditions under which more inequality leads to more rent seeking. I find that, when rent-seeking costs are fixed, a more unequal economy fosters a greater proportion of rentiers. When rent-seeking costs are flexible, the proportion of rentiers shrinks with more inequality. However, both the quantity of rents per person and the resources wasted in pursuing rent-seeking activities increase.

In the third essay, I link the education choices of women to gender-specific norms of marriage. Hypergamy (the practice of women "marrying up" by caste, age, education or any indicator of economic well-being) implies that too much education could lower women’s prospects of finding a suitable spouse. To understand its impact on pre-marital investments in education, this project studies women’s choice of educational attainment as a function of men’s. To do so, I examine the impact of an exogenous change in the schooling level of men on the schooling level of women in the United States in the last 50 years. The source of variation is the change in US' immigration policy in 1965, which has been documented to have considerably altered the demography and skill pool in the US since 1965. I find evidence of a positive relationship between men and women's education outcomes. This is a result suggestive of hypergamy and its dragging effect on women's education. The result is robust to the use of another control group: immigrant women in the US.