The retail price of inequality

David M. Frankel*, Eric D. Gould

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

33 Scopus citations

Abstract

This paper studies the relation between a city's income distribution and its retail price level using panel data. We find that an increase in the presence of lower-middle income households, relative to poor or upper income households, is associated with lower prices. Our findings suggest that greater income inequality raises the prices that poor households face, thus making it harder for them to invest in human capital.

Original languageAmerican English
Pages (from-to)219-239
Number of pages21
JournalJournal of Urban Economics
Volume49
Issue number2
DOIs
StatePublished - 2001

Bibliographical note

Funding Information:
*We thank Avner Ahituv, Jan Brueckner, Saul Lach, John Pencavel, Yoram Weiss, two anonymous referees, and seminar audiences at Boston University, Hebrew University, Stanford University, and Tel Aviv University for helpful comments. We also thank Dan Feenberg for crucial data and Yiftah Gordoni and Ran Greenwald for research assistance. Frankel acknowledges financial support from the Israel Foundations Trustees. Gould thanks the Falk Institute for financial support.

Keywords

  • Income distribution
  • Income inequality
  • Poverty
  • Retail prices

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