Abstract
Social scientists have suggested that a key sociobehavioral consequence of rising inequality is intensifying market competition for advantageous positions in the opportunity structure, such as residences that afford access to high-quality public schools. We assess empirical implications of inequality-fueled positional competition theories (PCTs) by analyzing the relationships between metropolitan income inequality, households’ efforts to secure residential positions in desirable school districts, and housing consumption behavior. We assemble a unique data set, which contains longitudinal information on household finances, residences, and geographic locations from the Panel Study of Income Dynamics; information on the quality of the school attendance areas in which these households reside; and information about the local real estate market. We find that greater inequality is associated with steeper housing price premia for residences in desirable areas, more pronounced social class sorting on school quality when relocating, and greater salience of schools relative to other housing amenities in families’ housing expenditure functions. Families in high-inequality regions exhibit modestly greater willingness to pay more (relative to their own incomes) for a given improvement in school desirability. The analysis brings important empirical nuance to oft-invoked but untested theories about positional competition as a mechanism by which inequality affects behaviors, consumption, and markets.
Highlights
Social scientists have suggested that a key sociobehavioral consequence of rising inequality is intensifying market competition for advantageous positions in the opportunity structure, such as residences that afford access to high-quality public schools
The positional competition thesis (PCT) suggests that as those at the top have captured a greater share of income, they have bid up the prices for the most advantageous positions, residences in desirable neighborhoods with the best schools (Frank 2007)
These tests yielded mixed evidence depending on the outcome metric: Models 5 and 6 suggest that where inequality is greater, competition for schools becomes more determinative of changes in log housing expenditures relative to the weight placed on gaining additional rooms
Summary
Social scientists have suggested that a key sociobehavioral consequence of rising inequality is intensifying market competition for advantageous positions in the opportunity structure, such as residences that afford access to high-quality public schools. We examine which households were most likely to engage in positional competition by moving to areas with more desirable schools and whether inequality heightens the relative weighting of school quality in households’ residential choices.
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