Journal of Economic Growth

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

Inequality and mobility

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


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.


Intergenerational mobility Inequality Educational policy 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Aghion P., Bolton P. (1997). A theory of trickle-down growth and development. The Review of Economic Studies 64(2): 151–172CrossRefGoogle Scholar
  2. Alesina A., Glaeser E., Sacerdote B. (2005). Work and leisure in the U.S. and Europe: Why so different? NBER Macroeconomics Annual 20: 1–64Google Scholar
  3. Alesina A., Rodrik D. (1994). Distributive politics and economic growth. The Quarterly Journal of Economics 109(2): 465–490CrossRefGoogle Scholar
  4. Baland J.M., Robinson J.A. (2000). Is child labor inefficient? Journal of Political Economy 108(4): 663–679Google Scholar
  5. Banerjee A.V., Newman A.F. (1993). Occupational choice and the process of development. Journal of Political Economy 101(2): 274–298CrossRefGoogle Scholar
  6. Barro R.J. (2000). Inequality and growth in a panel of countries. Journal of Economic Growth 5(1): 5–32CrossRefGoogle Scholar
  7. Benabou R. (2001). Social mobility and the demand for redistribution: The poum hypothesis. The Quarterly Journal of Economics 116(2): 447–487CrossRefGoogle Scholar
  8. Benabou R. (2002). Tax and education policy in a heterogeneous-agent economy: What levels of redistribution maximize growth and efficiency? Econometrica 70(2): 481–517CrossRefGoogle Scholar
  9. Björklund A., Eriksson T., Jantti M., Raaum O., Osterbacka E. (2002). Brother correlations in earnings in Demark, Finland, Norway and Sweden compared to the United States. Journal of Population Economics 15(4): 757–772CrossRefGoogle Scholar
  10. Blanchard O.J., Wolfers J. (2000). The role of shocks and institutions in the rise of european unemployment: The aggregate evidence. Economic Journal 110: 1–33CrossRefGoogle Scholar
  11. Blanden, J., Gregg, P., & Machin, S. (2005). Intergenerational mobility in Europe and North America—a report for the Sutton Trust. Centre for Economic Performance, London School of Economics.Google Scholar
  12. Blau F., Kahn L.M. (1996). International differences in male wage inequality: Institutions and market forces. Journal of Political Economy 104(4): 791–837CrossRefGoogle Scholar
  13. Blau F., Kahn L. (2002). At home and abroad: U.S. labor markets in international perspective. Russell Sage, New York, NYGoogle Scholar
  14. Checchi D., Ichino A., Rustichini A. (1999). More equal but less mobile? Education financing and intergenerational mobility in Italy and in the US. Journal of Public Economics 74(3: 351–393CrossRefGoogle Scholar
  15. Comi, S. (2003). Intergenerational mobility in Europe: Evidence from ECHP. Mimeo, Univerista degli studi di Milano.Google Scholar
  16. Cooper S., Durlauf S.N., Johnson P.A. (1993). On the evolution of economic status across generations. American Statistical Association Proceedings of Business and Economics 83: 50–58Google Scholar
  17. Dahan M., Gaviria A. (2001). Sibling correlations and intergenerational mobility in Latin America. Economic Development & Cultural Change 49(3): 537–554CrossRefGoogle Scholar
  18. Doepke M., Zilibotti F. (2005). The macroeconomics of child labor regulation. American Economic Review 95: 1492–1524CrossRefGoogle Scholar
  19. Durlauf S.N. (1996). A theory of persistent income inequality. Journal of Economic Growth 1(1): 75–93CrossRefGoogle Scholar
  20. Erikson, C. L., Ichino, A. (1994). Wage differentials in Italy: Market forces, institutions, and inflation. NBER Working Paper No. 4922, 1994.Google Scholar
  21. Fender J., Wang P. (2003). Educational policy in a credit constrained economy with skill heterogeneity. International Economic Review 44: 939–964CrossRefGoogle Scholar
  22. Fernandez R., Rogerson R. (1995). On the political economy of education subsidies. Review of Economic Studies 62(2): 249–262CrossRefGoogle Scholar
  23. Fernandez R., Rogerson R. (1998). Public education and income distribution: A dynamic quantitative evaluation of education-finance reform. American Economic Review 88(4): 813–833Google Scholar
  24. Galor O., Zeira J. (1993). Income distribution and macroeconomics. The Review of Economic Studies 60(1): 35–52CrossRefGoogle Scholar
  25. Galor O., Tsiddon D. (1997). Technological progress, mobility, and economic growth. American Economic Review 87: 363–382Google Scholar
  26. Glomm G., Ravikumar B. (1992). Public versus private investment in human capital, endogenous growth and income inequality. Journal of Political Economy 100(4): 813–834CrossRefGoogle Scholar
  27. Güell, M., Rodríguez Mora, J. V., & Telmer, C. (2007). Intergenerational mobility and the informative content of surnames. CEPR DP 6316.Google Scholar
  28. Hassler J., Rodríguez Mora J.V. (2000). Intelligence, social mobility, and growth. American Economic Review 90(4): 888–908CrossRefGoogle Scholar
  29. Hornstein A., Krusell P. (2003). Implications of the capital-embodiment revolution for directed R&D and wage inequality. Federal Reserve Bank of Richmond Economic Quarterly 89(4): 25–50Google Scholar
  30. Lambert, P., Prandy, K., & Bottero, W. (2007). By slow degrees: Two centuries of social reproduction and mobility in britain. Sociological Research Online, 12(1).Google Scholar
  31. Loury G.C. (1981). Intergenerational transfers and the distribution of earnings. Econometrica 49(4): 843–867CrossRefGoogle Scholar
  32. Maoz Y.D., Moav O. (1999). Intergenerational mobility and the process of development. Economic Journal 109(458): 677–697CrossRefGoogle Scholar
  33. Mayer, S. E., & Lopoo, L. M. (2001). Has the intergenerational transmission of economic status changed? Mimeo.Google Scholar
  34. Mourre, G. (2005). Wage compression and employment in Europe: First evidence from the structure of earnings survey 2002. Economic Papers no. 232, September 2005, European Commission, Directorate-General for Economic and Financial Affairs.Google Scholar
  35. Owen A.L., Weil D.N. (1998). Intergenerational earnings mobility, inequality and growth. Journal of Monetary Economics 41(1): 71–104CrossRefGoogle Scholar
  36. Perotti R. (1996). Growth, income distribution, and democracy: What the data say. Journal of Economic Growth 1(2): 149–187CrossRefGoogle Scholar
  37. Persson, T., & Tabellini, G. Is inequality harmful for growth? American Economic Review, 84(3), 600–621.Google Scholar
  38. Ryan P. (2001). The school-to-work transition: A cross-national perspective. Journal of Economic Literature 39(1): 34–92Google Scholar
  39. Solon, G. (1999). Intergenerational mobility in the labor market. Handbook of Labor Economics (Vol. 3A). In O. Ashenfelter & D. Card (Eds.), Handbooks in economics (Vol. 5, pp. 1761–1800). Amsterdam; New York and Oxford: Elsevier Science, North-Holland.Google Scholar
  40. Solon G. (2004). A model of intergenerational mobility variation over time and place. In: Corak M. (eds) Generational income mobility in North America and Europe. Cambridge University Press, CambridgeGoogle Scholar

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

Personalised recommendations