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Income Inequality, Equality of Opportunity, and Intergenerational Mobility

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  • Miles Corak

Abstract

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.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.27.3.79
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Bibliographic Info

Article provided by American Economic Association in its journal Journal of Economic Perspectives.

Volume (Year): 27 (2013)
Issue (Month): 3 (Summer)
Pages: 79-102

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Handle: RePEc:aea:jecper:v:27:y:2013:i:3:p:79-102

Note: DOI: 10.1257/jep.27.3.79
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Cited by:
  1. Piraino, Patrizio, 2014. "Intergenerational earnings mobility and equality of opportunity in South Africa," SALDRU Working Papers 131, Southern Africa Labour and Development Research Unit, University of Cape Town.
  2. John C. Boik, 2014. "First Microsimulation Model of a LEDDA Community Currency--Dollar Economy," Working Paper 0001, Principled Societies Project.
  3. Markus Jäntti & Stephen P. Jenkins, 2013. "Income Mobility," SOEPpapers on Multidisciplinary Panel Data Research 607, DIW Berlin, The German Socio-Economic Panel (SOEP).
  4. Campos-Vazquez, Raymundo M. & Chavez, Emmanuel & Esquivel, Gerardo, 2013. "Growth is (really) good for the (really) rich," MPRA Paper 52488, University Library of Munich, Germany.
  5. Tommaso Agasisti & Sergio Longobardi, 2014. "Educational institutions, resources, and students' resiliency: an empirical study about OECD countries," Economics Bulletin, AccessEcon, vol. 34(2), pages 1055-1067.
  6. Melissa S. Kearney & Phillip B. Levine, 2014. "Income Inequality, Social Mobility, and the Decision to Drop Out of High School," NBER Working Papers 20195, National Bureau of Economic Research, Inc.

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