- May 22, 2017
- CBR - Economics
Is the FTC Targeting ‘Stealth Consolidation’ by Private Equity?
The agency has signaled increased scrutiny of nonreportable mergers in healthcare.
Is the FTC Targeting ‘Stealth Consolidation’ by Private Equity?It is well known that the US has experienced a large increase in income inequality, which, in my view, is one of the biggest problems of the US economy. At the same time, there has been an increase in neighborhood segregation, especially in larger cities: the rich are more and more concentrated in rich neighborhoods and the poor in poor neighborhoods. Alessandra Fogli of the Federal Reserve Bank of Minneapolis and I document a strong correlation between inequality and residential segregation.
The data show that cities with more segregation have a bigger education gap between the children of rich and poor families—and have less intergenerational mobility, which measures how hard it is to become rich if your parents are poor. In rich neighborhoods, it’s easier for kids to get a good education, and the return on education is higher. There are better schools, parents invest more in after-school activities, and there are stronger peers. This means that segregation amplifies inequality. At the same time, inequality increases segregation because richer people are happy to pay more to live in better neighborhoods.
It is definitely hurting. To keep it alive, policy makers need to give poor kids the opportunity to get a good education. The American dream provides a powerful motivation for people to invest in education, which is the best strategy to reduce inequality.
Veronica Guerrieri is Ronald E. Tarrson Professor of Economics at Chicago Booth.
The agency has signaled increased scrutiny of nonreportable mergers in healthcare.
Is the FTC Targeting ‘Stealth Consolidation’ by Private Equity?The problem is larger than previously calculated.
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Should We Worry That the Social Security Trust Funds Are Going Bust?Your Privacy
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