Income Inequality, Equality of Opportunity, and Intergenerational Mobility

Source: Miles Corak, Journal of Economic Perspectives (forthcoming), July 8, 2013

.. [A]n emerging body of evidence suggests that more inequality of incomes in the present is likely to make family background play a stronger role in determining the adult outcomes of young people, with their own hard work playing a commensurately weaker role… This suggestion that higher inequality skews opportunity and lowers intergenerational mobility is the starting point of this paper. In particular, my focus is on the degree to which increasing inequality in the high-income countries, particularly in the United States, is likely to limit economic mobility for the next generation of young adults…

….The paper offers a descriptive, yet structured, discussion of the underlying drivers of opportunity that generate the relationship between inequality and intergenerational mobility. The goal is to explain why America differs from other countries, how intergenerational mobility will change in an era of higher inequality, and how the process is different for the top 1 percent. To lay the foundation, I begin by presenting the evidence that countries with more inequality at one point in time also experience less earnings mobility across the generations, a relationship that has been called “The Great Gatsby Curve.” I also outline how to interpret the common statistic measuring intergenerational earnings mobility and its relationship to the broader concept of equality of opportunity. My overview of the causal factors determining intergenerational mobility is based upon a framework drawn from some influential economic models often used to examine the intergenerational transmission of inequality. This framework focuses attention on the investments made in the human capital of children influencing their adult earnings and socio-economic status…
Related:
The Great Gatsby Curve: Inequality and the End of Upward Mobility
Source: Miles Corak, PBS NewsHour, July 15, 2013

Is the American economic system fundamentally unequal, perpetuating income inequality and stymieing upward economic mobility? Or do families — by virtue of their differing genes and values — reproduce income inequality? In our third in a series of three posts examining economic inequality in America, Miles Corak, professor of economics at the University of Ottawa, uses “The Great Gastsby” metaphor to respond to our two previous posters on this topic…

Rock, Economics and Rebuilding the Middle Class
Source: Simone Pathe, PBS NewsHour, July 12, 2013

What can the music industry teach us about America’s economic inequality and the state of upward mobility? Alan Krueger, outgoing chair of President Barack Obama’s Council of Economic Advisers, spoke at the Rock and Roll Hall of Fame in Cleveland, Ohio, last month about inequality in America and ways that the president’s economic policies are supposedly strengthening the middle class. … This is the first in a series of three posts examining economic inequality in America.

Former Bush Economist Defends the 1 Percent
Source: Simone Pathe, PBS NewsHour, July 12, 2013

Does unequal opportunity explain the persistence of income inequality in this country, and should the government intervene to close that gap? Greg Mankiw, the Robert M. Beren Professor of Economics at Harvard, served as George W. Bush’s chair of the Council of Economic Advisers from 2003 to 2005. In a forthcoming article in the Journal of Economic Perspectives, which is excerpted below, he argues against government redistribution of wealth away from the top 1 percent. This is the second in a series of three posts exploring economic inequality in America…