Economics Working Papers

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Working Paper

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This paper develops a general theory of socio-economic stratification based on the interconnection between a specific micro-level mechanism and a broad macro-level process. At the micro-level, it examines selective social identity stigmatization; at the macro-level it explains social exclusion using the goods taxonomy club goods concept. The paper argues individuals in disadvantaged social groups, particularly by race and gender, suffer two kinds of capability shortfalls: capability devaluations at the micro level and capability deficits and the macro-level. These capability shortfalls mutually reinforce and sustain an overall hierarchical ordering of social groups. Their interconnection is explained using a complexity theory analysis from Simon. These capability shortfalls imply two types of mutually supporting social reform policies: combatting discrimination in the case of stigmatization and advancing social group reparations in the case of social exclusion. Together, their goal is a non-hierarchical, pluralist democratic societies which promote individuals’ capability development irrespective of social identity.

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