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Inequality and Mobility

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Author Info
Hassler, John
Rodríguez Mora, José Vicente
Zeira, Joseph

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Abstract

We use a general equilibrium OLG model to analyse the relation between intergenerational social mobility and wage inequality. We show that the correlation between mobility and inequality depends on which factor caused the change in inequality. The model can thus help discriminate between different competing explanations of the recent rise in US wage inequality. Under reasonable assumptions, skill-biased technical change tends to increase upward mobility, thereby causing a positive correlation between wage inequality and mobility. Public subsidies to education reduce inequality, but the effect on mobility is ambiguous and depends on how well households with non-skilled parents can take advantage of the subsidy. The relation between subsidies and upward mobility is always concave in the short run and may also be so in the long run. Under some circumstances, the relationship between public support for education and mobility can follow an inverted U-pattern. The model can thus provide an explanation to different patterns of inequality and social mobility in Europe and the US.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2497.

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Date of creation: Jul 2000
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Handle: RePEc:cpr:ceprdp:2497

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Related research
Keywords: Educational Policy; Inequality; Intergenerational Mobility; Skill-Bias;

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Find related papers by JEL classification:
H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
J62 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Job, Occupational and Intergenerational Mobility; Promotion

References listed on IDEAS
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Michele Bernasconi & Paola Profeta, 2007. "Redistribution or Education? The Political Economy of the Social Race," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  2. Assar Lindbeck, 2002. "Changing Tides for the Welfare State -- An Essay," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  3. Panu Poutvaara, 2003. "On the Political Economy of Social Security and Public Education," Public Economics 0303001, EconWPA. [Downloadable!]
    Other versions:
  4. Bianchi, Milo, 2006. "Immigration Policy and Self-Selecting Migrants," Working Paper Series in Economics and Finance 627, Stockholm School of Economics, revised 02 Nov 2006. [Downloadable!]
    Other versions:
  5. Ryo Arawatari & Tetsuo Ono, 2009. "Inequality, Mobility and Redistributive Taxation in a Finance-constrained Economy," Discussion Papers in Economics and Business 09-28, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP). [Downloadable!]
  6. Lykke E. Andersen & Alice Brooks & Alejandro F. Mercado, 2004. "Macroeconomic Policies to Increase Social Mobility and Growth in Bolivia," Development Research Working Paper Series 02/2004, Institute for Advanced Development Studies. [Downloadable!]
  7. Ryo Arawatari & Tetsuo Ono, 2008. "A Second Chance at Success: A Political Economy Perspective?," Discussion Papers in Economics and Business 08-04, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
    Other versions:
  8. Lindbeck, Assar, 2001. "Changing Tides For The Welfare State," Seminar Papers 694, Stockholm University, Institute for International Economic Studies. [Downloadable!]
  9. Oded Galor, 2009. "Inequality and Economic Development: An Overview," Working Papers 2009-3, Brown University, Department of Economics. [Downloadable!]
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