FOUR ESSAYS ON THE ECONOMICS OF EDUCATION Note that Theorem 2 does not rule out equilibria in which some families live in lower-μ than do some higher-income families. I refer to these as unsorted (or imperfectly sorted) equilibria. They arise when the peer group advantage of high-income communities over low-income communities is large enough to overcome deficits in school For fixed income and effectiveness distributions, unsorted equilibria become harder to maintain as the weight that families place on peer group relative to school quality falls:.
