Skip to main content

Advertisement

SpringerLink
Log in

Inequality and mobility

  • Published:
Journal of Economic Growth Aims and scope Submit manuscript

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.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Aghion P., Bolton P. (1997). A theory of trickle-down growth and development. The Review of Economic Studies 64(2): 151–172

    Article  Google Scholar 

  • Alesina A., Glaeser E., Sacerdote B. (2005). Work and leisure in the U.S. and Europe: Why so different? NBER Macroeconomics Annual 20: 1–64

    Google Scholar 

  • Alesina A., Rodrik D. (1994). Distributive politics and economic growth. The Quarterly Journal of Economics 109(2): 465–490

    Article  Google Scholar 

  • Baland J.M., Robinson J.A. (2000). Is child labor inefficient? Journal of Political Economy 108(4): 663–679

    Google Scholar 

  • Banerjee A.V., Newman A.F. (1993). Occupational choice and the process of development. Journal of Political Economy 101(2): 274–298

    Article  Google Scholar 

  • Barro R.J. (2000). Inequality and growth in a panel of countries. Journal of Economic Growth 5(1): 5–32

    Article  Google Scholar 

  • Benabou R. (2001). Social mobility and the demand for redistribution: The poum hypothesis. The Quarterly Journal of Economics 116(2): 447–487

    Article  Google Scholar 

  • Benabou R. (2002). Tax and education policy in a heterogeneous-agent economy: What levels of redistribution maximize growth and efficiency? Econometrica 70(2): 481–517

    Article  Google Scholar 

  • 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): 757–772

    Article  Google Scholar 

  • Blanchard O.J., Wolfers J. (2000). The role of shocks and institutions in the rise of european unemployment: The aggregate evidence. Economic Journal 110: 1–33

    Article  Google Scholar 

  • 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.

  • Blau F., Kahn L.M. (1996). International differences in male wage inequality: Institutions and market forces. Journal of Political Economy 104(4): 791–837

    Article  Google Scholar 

  • Blau F., Kahn L. (2002). At home and abroad: U.S. labor markets in international perspective. Russell Sage, New York, NY

    Google Scholar 

  • 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: 351–393

    Article  Google Scholar 

  • Comi, S. (2003). Intergenerational mobility in Europe: Evidence from ECHP. Mimeo, Univerista degli studi di Milano.

  • 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: 50–58

    Google Scholar 

  • Dahan M., Gaviria A. (2001). Sibling correlations and intergenerational mobility in Latin America. Economic Development & Cultural Change 49(3): 537–554

    Article  Google Scholar 

  • Doepke M., Zilibotti F. (2005). The macroeconomics of child labor regulation. American Economic Review 95: 1492–1524

    Article  Google Scholar 

  • Durlauf S.N. (1996). A theory of persistent income inequality. Journal of Economic Growth 1(1): 75–93

    Article  Google Scholar 

  • Erikson, C. L., Ichino, A. (1994). Wage differentials in Italy: Market forces, institutions, and inflation. NBER Working Paper No. 4922, 1994.

  • Fender J., Wang P. (2003). Educational policy in a credit constrained economy with skill heterogeneity. International Economic Review 44: 939–964

    Article  Google Scholar 

  • Fernandez R., Rogerson R. (1995). On the political economy of education subsidies. Review of Economic Studies 62(2): 249–262

    Article  Google Scholar 

  • Fernandez R., Rogerson R. (1998). Public education and income distribution: A dynamic quantitative evaluation of education-finance reform. American Economic Review 88(4): 813–833

    Google Scholar 

  • Galor O., Zeira J. (1993). Income distribution and macroeconomics. The Review of Economic Studies 60(1): 35–52

    Article  Google Scholar 

  • Galor O., Tsiddon D. (1997). Technological progress, mobility, and economic growth. American Economic Review 87: 363–382

    Google Scholar 

  • Glomm G., Ravikumar B. (1992). Public versus private investment in human capital, endogenous growth and income inequality. Journal of Political Economy 100(4): 813–834

    Article  Google Scholar 

  • Güell, M., Rodríguez Mora, J. V., & Telmer, C. (2007). Intergenerational mobility and the informative content of surnames. CEPR DP 6316.

  • Hassler J., Rodríguez Mora J.V. (2000). Intelligence, social mobility, and growth. American Economic Review 90(4): 888–908

    Article  Google Scholar 

  • 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): 25–50

    Google Scholar 

  • Lambert, P., Prandy, K., & Bottero, W. (2007). By slow degrees: Two centuries of social reproduction and mobility in britain. Sociological Research Online, 12(1).

  • Loury G.C. (1981). Intergenerational transfers and the distribution of earnings. Econometrica 49(4): 843–867

    Article  Google Scholar 

  • Maoz Y.D., Moav O. (1999). Intergenerational mobility and the process of development. Economic Journal 109(458): 677–697

    Article  Google Scholar 

  • Mayer, S. E., & Lopoo, L. M. (2001). Has the intergenerational transmission of economic status changed? Mimeo.

  • 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.

  • Owen A.L., Weil D.N. (1998). Intergenerational earnings mobility, inequality and growth. Journal of Monetary Economics 41(1): 71–104

    Article  Google Scholar 

  • Perotti R. (1996). Growth, income distribution, and democracy: What the data say. Journal of Economic Growth 1(2): 149–187

    Article  Google Scholar 

  • Persson, T., & Tabellini, G. Is inequality harmful for growth? American Economic Review, 84(3), 600–621.

  • Ryan P. (2001). The school-to-work transition: A cross-national perspective. Journal of Economic Literature 39(1): 34–92

    Google Scholar 

  • 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.

  • 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, Cambridge

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Institute for International Economics Studies (IIES), Stockholm University, Stockholm, Sweden

    John Hassler

  2. Centre for Economic Policy Research, 53–56 Great Sutton Street, London, EC1V 0DG, UK

    John Hassler, José V. Rodríguez Mora & Joseph Zeira

  3. University of Southampton, Southampton, UK

    José V. Rodríguez Mora

  4. Universitat Pompeu Fabra, Barcelona, Spain

    José V. Rodríguez Mora

  5. University of Edinburgh, Edinburgh, UK

    José V. Rodríguez Mora

  6. Hebrew University of Jerusalem, Jerusalem, Israel

    Joseph Zeira

Authors
  1. John Hassler
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. José V. Rodríguez Mora
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Joseph Zeira
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to John Hassler.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Hassler, J., Rodríguez Mora, J.V. & Zeira, J. Inequality and mobility. J Econ Growth 12, 235–259 (2007). https://doi.org/10.1007/s10887-007-9019-x

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10887-007-9019-x

Keywords

Search

Navigation