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Income inequality, intergenerational mobility and the Great Gatsby Curve: is education the key?

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  • John Jerrim

    () (Department of Quantitative Social Science, Institute of Education, University of London)

  • Lindsey Macmillan

    () (Department of Quantitative Social Science, Institute of Education, University of London)

Abstract

It is widely believed that countries with greater levels of income inequality also have lower levels of intergenerational mobility. This relationship, known as the Great Gatsby Curve (GGC), has been prominently cited by high-ranking public policy makers, best-selling authors and Nobel Prize winning academics. Yet relatively little cross-national work has empirically examined the mechanisms thought to underpin the GGC – particularly with regards to the role of educational attainment. This paper uses the cross-nationally comparable Programme for International Assessment of Adult Competencies (PIAAC) dataset to shed new light on this issue. We find that income inequality is associated with several key components of the intergenerational transmission process – including access to higher education, the financial returns to education, and the direct effect of parental education upon labour market earnings. Thus, consistent with theoretical models, we find that educational attainment is an important driver of the relationship between intergenerational mobility and income inequality. We hence conclude that unequal access to financial resources plays a central role in the intergenerational transmission of advantage.

Suggested Citation

  • John Jerrim & Lindsey Macmillan, 2014. "Income inequality, intergenerational mobility and the Great Gatsby Curve: is education the key?," DoQSS Working Papers 14-18, Department of Quantitative Social Science - UCL Institute of Education, University College London.
  • Handle: RePEc:qss:dqsswp:1418
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    File URL: http://repec.ioe.ac.uk/REPEc/pdf/qsswp1418.pdf
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    References listed on IDEAS

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    1. Laura Chadwick & Gary Solon, 2002. "Intergenerational Income Mobility Among Daughters," American Economic Review, American Economic Association, vol. 92(1), pages 335-344, March.
    2. Deininger, Klaus & Squire, Lyn, 1996. "A New Data Set Measuring Income Inequality," World Bank Economic Review, World Bank Group, vol. 10(3), pages 565-591, September.
    3. Gary S. Becker & Nigel Tomes, 1994. "Human Capital and the Rise and Fall of Families," NBER Chapters,in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 257-298 National Bureau of Economic Research, Inc.
    4. Miles Corak, 2013. "Income Inequality, Equality of Opportunity, and Intergenerational Mobility," Journal of Economic Perspectives, American Economic Association, vol. 27(3), pages 79-102, Summer.
    5. Paul Gregg & Jan. O. Jonsson & Lindsey Macmillan & Carina Mood, 2013. "Understanding income mobility: the role of education for intergenerational income persistence in the US, UK and Sweden," DoQSS Working Papers 13-12, Department of Quantitative Social Science - UCL Institute of Education, University College London.
    6. Jo Blanden, 2013. "Cross-Country Rankings In Intergenerational Mobility: A Comparison Of Approaches From Economics And Sociology," Journal of Economic Surveys, Wiley Blackwell, vol. 27(1), pages 38-73, February.
    7. A. B. Atkinson & S. P. Jenkins, 1984. "The Steady-State Assumption and the Estimation of Distributional and Related Models," Journal of Human Resources, University of Wisconsin Press, vol. 19(3), pages 358-376.
    8. Blanden, Jo, 2013. "Cross-national rankings of intergenerational mobility: a comparison of approaches from economics and sociology," LSE Research Online Documents on Economics 59310, London School of Economics and Political Science, LSE Library.
    9. Dan Andrews & Andrew Leigh, 2009. "More inequality, less social mobility," Applied Economics Letters, Taylor & Francis Journals, vol. 16(15), pages 1489-1492.
    10. Andrea Brandolini & Anthony B. Atkinson, 2001. "Promise and Pitfalls in the Use of "Secondary" Data-Sets: Income Inequality in OECD Countries As a Case Study," Journal of Economic Literature, American Economic Association, vol. 39(3), pages 771-799, September.
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    1. Income inequality, intergenerational mobility and the Great Gatsby Curve: is education the key?
      by maximorossi in NEP-LTV blog on 2014-11-25 17:22:53

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    Cited by:

    1. Paul Gregg & Lindsey Macmillan & Claudia Vittori, 2015. "Nonlinear Estimation of Lifetime Intergenerational Economic Mobility and the Role of Education," DoQSS Working Papers 15-03, Department of Quantitative Social Science - UCL Institute of Education, University College London.
    2. Marco Paccagnella, 2015. "Skills and Wage Inequality: Evidence from PIAAC," OECD Education Working Papers 114, OECD Publishing.

    More about this item

    Keywords

    Income inequality; intergenerational mobility; Great Gatsby Curve; PIAAC.;

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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