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The Great Gatsby Curve

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  • Steven N. Durlauf
  • Andros Kourtellos
  • Chih Ming Tan

Abstract

This paper provides a synthesis of theoretical and empirical work on the Great Gatsby Curve, the positive empirical relationship between cross-section income inequality and persistence of income across generations. We present statistical models of income dynamics that mechanically give rise to the relationship between inequality and mobility. Five distinct classes of theories, including models on family investments, skills, social influences, political economy, and aspirations are developed, each providing a behavioral mechanism to explain the relationship. Finally, we review empirical studies that provide evidence of the curve for a range of contexts and socioeconomic outcomes as well as explore evidence on mechanisms.

Suggested Citation

  • Steven N. Durlauf & Andros Kourtellos & Chih Ming Tan, 2022. "The Great Gatsby Curve," NBER Working Papers 29761, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:29761
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    1. Battiston, Diego Ezequiel & Maurer, Stephan Ernst & Potlogea, Andrei & Rodríguez Mora, José V., 2023. "The dynamics of the 'Great Gatsby Curve' and a look at the curve during the Great Gatsby era," LSE Research Online Documents on Economics 121316, London School of Economics and Political Science, LSE Library.
    2. Markussen, Simen & Røed, Knut, 2023. "The rising influence of family background on early school performance," Economics of Education Review, Elsevier, vol. 97(C).
    3. Giovanni Bernardo & Giuseppe Cinquegrana & Giovanni Fosco, 2023. "Teenage parenthood, circumstances and educational mobility of children," Discussion Papers 2023/289, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    4. Bohmann, Sandra & Kalleitner, Fabian, 2023. "Subjective Inequity Aversion: Unfair Inequality, Subjective Well-Being, and Preferences for Redistribution," SocArXiv g8arw, Center for Open Science.
    5. Yoosoon Chang & Steven Durlauf & Seunghee Lee & Joon Park, 2023. "A Trajectories-Based Approach to Measuring Intergenerational Mobility," CAEPR Working Papers 2023-004 Classification-C, Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington.
    6. Pestieau, Pierre & Racionero, Maria, 2023. "Education, mobility and redistribution," LIDAM Discussion Papers CORE 2023024, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    7. Martín Trombetta, 2023. "The distributional implications of short-term income mobility: evidence for Latin America," Working Papers 241, Red Nacional de Investigadores en Economía (RedNIE).
    8. Carranza, Rafael & Nolan, Brian & Bavaro, Michele, 2023. "Intergenerational Poverty Persistence in Europe - Is There a 'Great Gatsby Curve' for Poverty?," INET Oxford Working Papers 2023-22, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford, revised Dec 2023.
    9. Carneiro, Pedro & Reis, Hugo & Toppeta, Alessandro, 2024. "Parental Investments and Socio-Economic Gradients in Learning across European Countries," IZA Discussion Papers 16785, Institute of Labor Economics (IZA).
    10. Perelman, Sergio & Pestieau, Pierre & Racionero, Maria, 2023. "Social mobility, education and populism," LIDAM Discussion Papers CORE 2023026, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    11. Gangl, Markus, 2024. "Economic inequality and the cross-cutting of social circles: Evidence for a Great Gatsby curve in European marriage and partnership markets," OSF Preprints pfv6w, Center for Open Science.

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    • D3 - Microeconomics - - Distribution
    • H0 - Public Economics - - General
    • J0 - Labor and Demographic Economics - - General
    • R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General

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