Sunday, January 22, 2012

Inequality and mobility

The so-called Great Gatsby diagram that Alan Krueger presented recently shows that there is a positive correlation between inequality and lack of social mobility. The graph below shows a full version.
Note that the only African and the four Latin American countries are on the higher end of the graph, while the four Nordic and the three British off-shoots in the sample are at the other end of the Gatsby curve. The US uncomfortably close to the higher end of the curve. No particular observation. Graph does all the job. The source for the graph is Miles Corak here.


  1. If one thinks about this, what is astounding is that there is much discussion about this fact.

    After all, income inequality within one generation, means that some parents should not be able to provide their kids with the best support; therefore, those kids (i.e. the following generation) must it harder to move up the income scale later on in life.

    The opposite with wealthier parents: they should be able to provide their kids with a better support level. Those kids should have an easier time later on.

    This is just simple common sense, and, I may be mistaken, but it seems obvious and reasonable to me.

    What is not common sense (therefore, not necessarily obvious and requiring further elaboration) is the alternative supposition that large income/wealth inequality in one generation needs not be accompanied by large income/wealth inequality in following generations. How does this work?

  2. I suppose the discussion results from the fact that the founding myth about the US is that it is the land of opportunity. But alas, it is not.


Inequality and Stagnation by Policy Design

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