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Inequality and Mobility

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Author Info
John Hassler
Jose V. Rodriguez Mora
Joseph Zeira

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Abstract

Acknowledging that wage inequality and intergenerational mobility are strongly interrelated, this paper presents a model in which both are jointly determined. The model enables us to study how inequality and mobility are affected by exogenous changes and what determines their correlation. A main implication of the model is that differences in the amount of public subsidies to education and educational quality produce cross-country patterns with a negative correlation between inequality and mobility. Differences in the labor market, like differences in skill-biased technology or wage compression instead produce a positive correlation. The predictions of the model are found to be consistent with various empirical observations on mobility and inequality.

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Paper provided by Edinburgh School of Economics, University of Edinburgh in its series ESE Discussion Papers with number 165.

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Length: 38
Date of creation: Sep 2007
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Handle: RePEc:edn:esedps:165

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References listed on IDEAS
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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. 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:
  2. 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:
  3. Lindbeck, Assar, 2001. "Changing Tides For The Welfare State," Seminar Papers 694, Stockholm University, Institute for International Economic Studies. [Downloadable!]
  4. 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!]
  5. 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!]
  6. Panu Poutvaara, 2003. "On the Political Economy of Social Security and Public Education," Public Economics 0303001, EconWPA. [Downloadable!]
    Other versions:
  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).
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  8. 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!]
  9. Oded Galor, 2009. "Inequality and Economic Development: An Overview," Working Papers 2009-3, Brown University, Department of Economics. [Downloadable!]
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