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Beyond Education And Fairness: A Labor Market Taxation Model For The Great Gatsby Curve

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  • Lars Lefgren
  • Frank McIntyre
  • David P. Sims

Abstract

type="main" xml:id="ecin12185-abs-0001"> Applied researchers have been drawn to models that attribute the demonstrated cross-country differences in intergenerational income transmission to government failures to invest in the human capital of poor children. To highlight another potential mechanism, the disincentive effects of labor market taxation and redistribution, we present a simple model that can explain cross-country differences in intergenerational mobility and other previously observed empirical patterns. Empirical tests using data on income mobility, tax rates, and public expenditures largely support the model predictions. We conclude that the common presumption that intergenerational mobility largely measures fairness or opportunity, and the resultant policy recommendations, are premature . ( JEL D31, J24, J62)

Suggested Citation

  • Lars Lefgren & Frank McIntyre & David P. Sims, 2015. "Beyond Education And Fairness: A Labor Market Taxation Model For The Great Gatsby Curve," Economic Inquiry, Western Economic Association International, vol. 53(2), pages 962-978, April.
    • Handle: RePEc:bla:ecinqu:v:53:y:2015:i:2:p:962-978
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    Cited by:

    1. Tharcisio Leone, 2022. "The geography of intergenerational mobility: Evidence of educational persistence and the “Great Gatsby Curve” in Brazil," Review of Development Economics, Wiley Blackwell, vol. 26(3), pages 1227-1251, August.
    2. driouchi, ahmed & Gamar, Alae, 2015. "Is there a Gatsby Curve for Educational Attainment in Arab Countries?," MPRA Paper 63869, University Library of Munich, Germany, revised 22 Apr 2015.
    3. Tharcisio Leone, 2019. "Intergenerational Mobility in Education: Estimates of the Worldwide Variation," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 44(4), pages 1-42, December.
    4. Tharcisio Leone, 2019. "The Geography of Intergenerational Mobility: Evidence of Educational Persistence and the “Great Gatsby Curve" in Brazil," Documentos de Trabajo 17526, The Latin American and Caribbean Economic Association (LACEA).
    5. Lars J. Lefgren & Jaren C. Pope & David P. Sims, 2022. "Contemporary State Policies and Intergenerational Income Mobility," Journal of Human Resources, University of Wisconsin Press, vol. 57(4), pages 1107-1146.
    6. Leone, Tharcisio, 2019. "The geography of intergenerational mobility: Evidence of educational persistence and the "Great Gatsby Curve" in Brazil," GIGA Working Papers 318, GIGA German Institute of Global and Area Studies.
    7. Driouchi, Ahmed & Gamar, Alae, 2016. "The Gap between Educational & Social Intergenerational Mobility in Arab Countries," MPRA Paper 73998, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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