The retail price of inequality

This paper studies the relation between a city's income distribution and it s retail price level using panel data. We find that an increase in the pres ence of lower-middle income households, relative to poor or upper income ho useholds, is associated with lower prices. Our findings suggest that greate r income inequality raises the prices that poor households face, thus makin g it harder for them to invest in human capital. (C) 2000 Academic Press.