Firm Responses to Growing Inequality in Income and the Cost of Time.

This paper uses a cost-of-time framework to link two seamingly unrelated trends. First, greater aggregate income inequality has been accompanied by greater geographic income specialization. Second, compensation costs (relative to sales) of suburban retail stores have risen, compared to city retail stores. The cost of time model predicts that greater geographic income inequality should cause greater inequality in the time-saving conveniences offered by stores located in suburbs versus those in cities.