scholarly journals Income Inequality, Intergenerational Mobility, and the Great Gatsby Curve: Is Education the Key?

Social Forces ◽  
2015 ◽  
Vol 94 (2) ◽  
pp. 505-533 ◽  
Author(s):  
John Jerrim ◽  
Lindsey Macmillan
2018 ◽  
Vol 17 (5) ◽  
pp. 496-518 ◽  
Author(s):  
Eyal Bar-Haim

AbstractIn recent years, the authors of several studies have established that income inequality is negatively associated with intergenerational income mobility in a phenomenon known as “The Great Gatsby Curve.” Yet, extant research on the effects of inequality and social mobility on people’s perceptions and social and political behavior has yielded contradicting results. In light of these inconsistencies, the aim of the current study was to evaluate the association between income inequality and subjective intergenerational mobility. Using data from 40 countries, the effect of income inequality on subjective mobility was examined, along with their combined effect on views regarding redistribution. The results indicated that income inequality increases mainly subjective downward mobility. The effect of subjective mobility on the attitudes toward redistribution was found to be substantial, but there were no significant results highlighting an interaction between inequality and subjective mobility. The results show how individual perceptions of opportunity inequalities are affected by the structural constraints of society. The social implications of these results are discussed herein.


2019 ◽  
Vol 5 ◽  
pp. 237802311988128 ◽  
Author(s):  
Ernesto F. L. Amaral ◽  
Shih-Keng Yen ◽  
Sharron Xuanren Wang-Goodman

We provide an overview of associations between income inequality and intergenerational mobility in the United States, Canada, and eight European countries. We analyze whether this correlation is observed across and within countries over time. We investigate Great Gatsby curves and perform metaregression analyses based on several papers on this topic. Results suggest that countries with high levels of inequality tend to have lower levels of mobility. Intergenerational income elasticities have stronger associations with the Gini coefficient compared to associations with the top 1 percent income share. Once models are controlled for methodological variables, country indicators, and paper indicators, correlations of mobility with the Gini coefficient lose significance but not with the top 1 percent income share. This result is an indication that recent increases in inequality at the top of the distribution might be negatively affecting mobility on a greater magnitude compared to variations across the income distribution.


2021 ◽  
Vol 59 (4) ◽  
pp. 1191-1239
Author(s):  
Junsen Zhang

After China’s recent great success in eliminating absolute poverty, addressing relative income inequality becomes a more important issue. This survey finds that income inequality rapidly increased in the first three decades since 1978 but stabilized and slightly declined in the past decade, consistent with the well-known Kuznets hypothesis. In addition to documenting the trend and patterns over time and across groups and regions, seven sources of income inequality are systematically discussed with an effort to reconcile and extend the existing literature. Furthermore, a negative correlation is documented between income inequality and intergenerational mobility, consistent with the Great Gatsby curve observed in developed countries. (JEL D31, D63, O15, P36)


2014 ◽  
Vol 10 (2) ◽  
pp. 231-255 ◽  
Author(s):  
CHRISTOPHER J. BOUDREAUX

Abstract:Income inequality is often attributed to declines in income mobility following the Great Gatsby curve, but this relationship is of secondary importance in determining the factors of income mobility if one considers that changing rules is more important than changing outcomes under defined rules. Rather, improvements in institutional quality are hypothesized to increase income mobility by allowing entrepreneurs the freedom to pursue their dreams. This paper is the first to empirically analyze the institutional determinants behind entrepreneurship, and their effect on income mobility. The findings from a cross-country analysis suggest that secure property rights and less corruption are associated with less income persistence, leading to higher income mobility, independent of the Great Gatsby effect. This suggests that reducing corruption and protection of property rights increase income mobility through the channels of entrepreneurship.


2015 ◽  
Vol 4 (2) ◽  
pp. 234-256
Author(s):  
Young Back Choi

Purpose – The purpose of this paper is to question the frequently heard claims of a negative relationship between inequality and intergenerational mobility (such as the “Great Gatsby Curve” by Alan Krueger) and to propose entrepreneurship as the neglected prime countervailing force against the putative advantages of the rich. Design/methodology/approach – A critical examination of evidences marshalled to support the case for a negative relationship between inequality and mobility, in terms of the appropriateness of statistical inferences and the consistency between implications and observations. The paper adopts alternative approach of Austrian economic in emphasizing the role of entrepreneurship in generating mobility. Findings – The putative negative relationship between inequality and mobility is not supported by evidence. The result is partly that egalitarians tend to skip close examination when they run into evidence that seems to support their preconception. It is also partly that the dominant tradition in economics, based on the model of efficient allocation of given resources, induces them to overlook entrepreneurship, the prime wealth creator and generator of mobility. Research limitations/implications – The research outlines an argument that the rich do not have advantage in entrepreneurship because it depends not on the ownership of currently valued resources, but on the discovery and exploitation of profitable opportunities. This claim is made based on Kirznerian perspective and author’s own theory of inference and learning process. However, it would be nice to able to provide empirical evidence of this claim made in the paper. Social implications – Many policies of redistribution, based on the belief that increase in inequality (as measured by Gini coefficient) signifies a diminution of intergenerational mobility, should be re-examined since the alleged negative relationship between inequality and intergenerational mobility turns out to be untrue. For greater intergenerational mobility, entrepreneurs should be encouraged, by allowing them to experiment freely. Originality/value – Emphasizing the role of entrepreneurship in intergenerational mobility and the dealing with the question of whether or not the rich would have advantage in entrepreneurship is original to this paper.


2013 ◽  
Vol 27 (3) ◽  
pp. 79-102 ◽  
Author(s):  
Miles Corak

My focus is on the degree to which increasing inequality in the high-income countries, particularly in the United States, is likely to limit economic mobility for the next generation of young adults. I discuss the underlying drivers of opportunity that generate the relationship between inequality and intergenerational mobility. The goal is to explain why America differs from other countries, how intergenerational mobility will change in an era of higher inequality, and how the process is different for the top 1 percent. I begin by presenting evidence that countries with more inequality at one point in time also experience less earnings mobility across the generations, a relationship that has been called “The Great Gatsby Curve.” The interaction between families, labor markets, and public policies all structure a child's opportunities and determine the extent to which adult earnings are related to family background—but they do so in different ways across national contexts. Both cross-country comparisons and the underlying trends suggest that these drivers are all configured most likely to lower, or at least not raise, the degree of intergenerational earnings mobility for the next generation of Americans coming of age in a more polarized labor market. This trend will likely continue unless there are changes in public policy that promote the human capital of children in a way that offers relatively greater benefits to the relatively disadvantaged.


2018 ◽  
Author(s):  
Ernesto F. L. Amaral ◽  
Shih-Keng Yen ◽  
Sharron Xuanren Wang

We provide an overview of associations between income inequality and intergenerational mobility in the United States, Canada, and eight European countries. We analyze whether this correlation is observed across and within countries over time. We investigate Great Gatsby curves and perform metaregression analyses based on several papers on this topic. Results suggest that countries with high levels of inequality tend to have lower levels of mobility. Intergenerational income elasticities have stronger associations with the Gini coefficient compared to associations with the top 1 percent income share. Once models are controlled for methodological variables, country indicators, and paper indicators, correlations of mobility with the Gini coefficient lose significance but not with the top 1 percent income share. This result is an indication that recent increases in inequality at the top of the distribution might be negatively affecting mobility on a greater magnitude compared to variations across the income distribution.


2021 ◽  
pp. 97-112
Author(s):  
Ravi Kanbur

The conventional justification for moving from income distribution to intergenerational mobility analysis is that the movie encompasses the snapshot and is normatively superior as the basis for assessing policy. Such a perspective underpins many an argument for shifting the focus from income redistribution, which is said to equalize outcomes, to equalizing opportunity by increasing mobility through education policy such as equal provision of public education. This chapter argues that this perspective can be misleading. It shows that normative evaluation of income mobility in any event often falls back on a snapshot perspective. Further, the snapshot itself often contains the seeds of the movie, as posited in the Great Gatsby Curve. Income redistribution can itself improve mobility even if that is the only objective. The chapter thus speaks in praise of snapshots.


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