Journal of Economic Growth

, Volume 12, Issue 3, pp 235–259 | Cite as

Inequality and mobility

  • John Hassler
  • José V. Rodríguez Mora
  • Joseph Zeira
Article

Abstract

Acknowledging that wage inequality and intergenerational mobility are strongly interrelated, this paper presents a model in which both are jointly determined. The model enables us to study how inequality and mobility are affected by exogenous changes and what determines their correlation. A main implication of the model is that differences in the amount of public subsidies to education and educational quality produce cross-country patterns with a negative correlation between inequality and mobility. Differences in the labor market, like differences in skill-biased technology or wage compression instead produce a positive correlation. The predictions of the model are found to be consistent with various empirical observations on mobility and inequality.

Keywords

Intergenerational mobility Inequality Educational policy 

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Copyright information

© Springer Science+Business Media, LLC 2007

Authors and Affiliations

  • John Hassler
    • 1
    • 2
  • José V. Rodríguez Mora
    • 2
    • 3
    • 4
    • 5
  • Joseph Zeira
    • 2
    • 6
  1. 1.Institute for International Economics Studies (IIES)Stockholm UniversityStockholmSweden
  2. 2.Centre for Economic Policy ResearchLondonUK
  3. 3.University of SouthamptonSouthamptonUK
  4. 4.Universitat Pompeu FabraBarcelonaSpain
  5. 5.University of EdinburghEdinburghUK
  6. 6.Hebrew University of JerusalemJerusalemIsrael

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