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Mobility, Inequality, and Growth: An Inverted-U Relationship

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  • Keishun Suzuki

    (Chiba University)

Abstract

Empirical studies show that income inequality and economic growth tend to have unclear relationship. To explain the mechanism, this paper presents a simple model in which mobility, inequality, and growth are endogenously determined. In our model, children decide whether or not to acquire education in response to the income transfer from the parent, the each individual's own ability to learn, the wage inequality between educated workers and uneducated workers, and the family background. Their education accumulates knowledge capital that is the driving force of the economic growth. We analytically demonstrate that the inequality has an inverted-U relation with the growth rate through the acceleration of upward mobility.

Suggested Citation

  • Keishun Suzuki, 2020. "Mobility, Inequality, and Growth: An Inverted-U Relationship," Economics Bulletin, AccessEcon, vol. 40(3), pages 2047-2057.
    • Handle: RePEc:ebl:ecbull:eb-20-00459
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Social mobility; Income inequality; Education;
    All these keywords.

    JEL classification:

    • I2 - Health, Education, and Welfare - - Education
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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