Great Gatsby Curve Research Articles

The impact of subjective intergenerational mobility on well-being: evidence from China

Although social mobility has been shown to be essential for subjective well-being, empirical evidence on the relationship between subjective intergenerational mobility and well-being in the developing world is relatively limited and needs to be more comprehensive and conclusive. The primary purpose of this research was to investigate the impact of subjective intergenerational mobility on the well-being of Chinese residents. Using data from the China Labor Force Dynamics Survey conducted from 2012 to 2016, the results revealed an upward trend in the subjective intergenerational mobility of Chinese residents. Specifically, subjective intergenerational elasticity increased from 0.264 in the 1950s to 0.390 in the 1980s. Subjective intergenerational mobility positively influences well-being. In particular, it exerts an indirect positive effect on the well-being of Chinese residents through the self-evaluation of health and social inequality. This study also proves that the subjective Great Gatsby Curve exists in China. The practical implications of this research are that the human capital of Chinese residents should be improved and that restrictive institutional systems should be discontinued to improve residents’ subjective social status.

Intergenerational poverty persistence in Europe – Is there a ‘Great Gatsby Curve’ for poverty?

While the influence of poverty in childhood on adulthood outcomes has been extensively studied, little is known about how the strength of intergenerational persistence in poverty itself varies across countries. Here we examine the intergenerational persistence of poverty in a comparative analysis of 30 European countries using data from the 2019 ad hoc module of the EU-SILC dataset. We construct proxy measures of poverty in the parental household employing information on the inability to meet basic needs and financial hardship when growing up, together with parental education and occupational social class. The strength of the association between current poverty based on the indicators at the core of the EU’s social inclusion process and these measures of parental poverty is assessed and compared across countries. The cross-country variation in poverty persistence is probed concerning its relationship with the current and past extent of poverty: persistence tends to be stronger where current or parental poverty is higher, analogous to the Great Gatsby Curve relating intergenerational income mobility to income inequality at the country level. Mediation analysis highlights the role of own education as well as occupation in underpinning the observed relationship between current and parental poverty.

The Total Effect of Social Origins on Educational Attainment: Meta-analysis of Sibling Correlations From 18 Countries

The sibling correlation (SC), which estimates the total effect of family background (i.e., social origins), can be interpreted as measuring a society's inequality of opportunity. Its sensitivity to observed and unobserved factors makes the SC an all-encompassing measure and an attractive choice for comparative research. We gather and summarize all available estimates of SCs in educational attainment (M = .46, SD = .09) and employ meta-regression to explore variability in these estimates. First, we find significantly lower SCs in Sweden, Norway, Finland, and Denmark than in the United States, with U.S. correlations roughly .10 (i.e., 25%) higher. Most other (primarily European) countries in our study are estimated to fall in between these countries and the United States. Second, we find a novel Great Gatsby Curve–type positive association between income inequality in childhood and the SC, both cross-nationally and within countries over time. This finding supports theoretical accounts of the Great Gatsby Curve that emphasize the role of educational inequality as a link between economic inequality and social immobility. It implies that greater equality of educational opportunity likely requires reduced economic inequality. Additionally, correlations between sisters are modestly higher, on average, than those between brothers or all siblings, and we find no overall differences between cohorts.

The academic Great Gatsby Curve.

The Great Gatsby Curve measures the relationship between income inequality and intergenerational income persistence. By using genealogical data of over 245 000 mentor-mentee pairs and their academic publications from 22 different disciplines, this study demonstrates that an academic Great Gatsby Curve exists as well, in the form of a positive correlation between academic impact inequality and the persistence of impact across academic generations. We also provide a detailed breakdown of academic persistence, showing that the correlation between the impact of mentors and that of their mentees has increased over time, indicating an overall decrease in academic intergenerational mobility. We analyse such persistence across a variety of dimensions, including mentorship types, gender and institutional prestige.

A lost land of opportunity? The geography of intergenerational educational mobility in China

AbstractDespite the significant political, economic and geographical diversity in China, there is limited research on spatial differences in intergenerational mobility in China. This research aims to fill this gap by exploring the spatial and temporal dimensions of intergenerational educational mobility in China. The data used for the analysis is the 2010–2018 China Family Panel Studies (CFPS), a nationally representative longitudinal general social survey. The analysis incorporates both relative and absolute mobility measures to provide a comprehensive description of intergenerational educational mobility. The results reveal substantial regional differences in intergenerational educational mobility across various economic zones in China, with a rising geographic inequality over time. The southwest and northeast regions stand out as the areas where the educational prospects of the young generation have become not only bleaker but dependent more on their parents. Additionally, this study presents the first education Great Gatsby Curve for China, highlighting the strong relationship between intergenerational mobility and education inequality at the regional level, particularly after China's market reform. The findings highlight the need for regionally targeted policies and levelling up agendas to promote educational opportunities in low‐mobility regions.

Intergenerational education mobility in India: nonlinearity and the Great Gatsby Curve.

Intergenerational education mobility, which reflects the degree to which an individual's educational attainment is independent of their parents' education, is essential for promoting equal opportunities in society. In the context of India, where socio-economic disparities are deeply entrenched, understanding the dynamics of intergenerational mobility is particularly crucial. This paper examines various aspects of intergenerational education mobility in India using data from the Indian Human Development Survey (IHDS), a nationally representative multi-topic survey. We analyze intergenerational mobility across different age cohorts and investigate the nonlinearities in the transmission of education. Additionally, we explore the impact of educational inequality, economic growth, and public expenditure on education on mobility outcomes. Our analysis reveals a high degree of intergenerational persistence in education, although this persistence has decreased over time. Employing quantile regressions, we observe significant nonlinearities in the relationship between fathers' and sons' educational outcomes across the educational distribution. In particular, we find a widening mobility gap between historically advantaged subgroups (urban populations, upper castes, Hindus) and disadvantaged groups (rural populations, lower castes, Muslims) at the middle and upper quantiles. Moreover, we confirm the "Higher Inequality leading to Lesser Mobility" nexus, supporting the 'Great Gatsby Curve' within the Indian context. Macroeconomic factors, such as economic growth and public expenditure on education, are positively correlated with educational mobility, suggesting that these factors play a critical role in enhancing mobility. These findings highlight the importance of targeted policy interventions to reduce educational disparities and promote greater intergenerational mobility. The widening mobility gaps between socio-economic and demographic groups emphasize the need for more equitable resource distribution and educational reforms. Future research should explore the multifaceted aspects of intergenerational mobility, incorporating longitudinal studies and regional analyses to deepen our understanding of the underlying mechanisms.

Wealth inequality and intergenerational mobility in Russia: possibilities of tax regulation

The economic inequality of people in Russia today is high. The decline in intergenerational mobility is determined by increasing concentration of capital. The purpose of the study is to examine the capabilities of taxes in smoothing the wealth inequality of Russians and strengthening the intergenerational mobility in the framework of assessing their relationship on the basis of the World Bank database. According to the results of the analysis, there was a decrease in the mobility between generations in Russia and emergence of the problem of consolidating the economic situation within family, which, if the present trends continue, will be intensifying. For generations born in the 1970s and 1980s, there was recorded a sharp increase in the relative indicator of immobility — the correlation coefficient between the duration of education of children and their parents, from 0.32 to 0.48. There is observed a decrease in the absolute indicators of mobility between generations — a decrease in the share of children who got a longer or higher education than their parents. The Great Gatsby Curve has been transformed in the coordinates of the concentration coefficient of net personal wealth and relative intergenerational mobility in education. Russia’s position on the Great Gatsby Curve indicates aggravation of two related problems — consolidation of inequality and reduction of mobility between generations. To level the economic inequality in Russia, it is necessary to increase vertical mobility between generations. One of the traditional and effective ways of the state regulation of the polarization of personal assets and property of citizens is tax regulation. Today in Russia, property taxes do not help to smooth out the inequality. Personal income tax on donations and property taxes of citizens make in total about 1% of the tax revenues of the consolidated budget. Concentration of wealth in 10% of the most affluent Russians exceeded 74% in 2021. Progressive taxation of personal property, increased rates for owners of many real estate objects, ««luxury tax», inheritance and gift tax, as well as capital taxation have prospects from the standpoint of smoothing wealth inequality and activating intergenerational mobility in Russia.

Welfare Regimes and Intergenerational Social Mobility: An Institutional Explanation of the Great Gatsby Curve

Welfare Regimes and Intergenerational Social Mobility: An Institutional Explanation of the Great Gatsby Curve

The Great Gatsby Curve

This paper provides a synthesis of theoretical and empirical work on the Great Gatsby Curve, the positive empirical relationship between cross-sectional income inequality, and persistence of income across generations. We present statistical models of income dynamics that mechanically give rise to the relationship between inequality and mobility. Five distinct classes of theories are developed, including models on family investments, skills, social influences, political economy, and aspirations, each providing a behavioral mechanism to explain the relationship. Finally, we review empirical studies that provide evidence of the curve for a range of contexts and socioeconomic outcomes as well as explore evidence on mechanisms.

The Great Gatsby Curve for Mexico: intergenerational labor precariousness

In recent years, the labor market in Mexico has become increasingly precarious, as the proportion of the employed population that receives low wages has risen and the critical conditions of occupation have grown exponentially. To enrich the concept of labor precariousness, we aggregate three additional variables. Through a logit model —with data from the ESRU-EMOVI (2017)—we proved that a set of variables that are external to individuals have statistically significant effects on the employment trajectory and social mobility of the employed population. These results empirically validate The Great Gatsby Curve for Mexico.

The geography of intergenerational mobility: Evidence of educational persistence and the “Great Gatsby Curve” in Brazil

AbstractThis paper explores the variation in intergenerational educational mobility across the Brazilian states based on univariate econometric techniques. The analysis of the national household survey (PNAD‐2014) confirms a strong variation in mobility among the 27 federative units in Brazil and demonstrates a significant correlation between mobility and income inequality. In this sense, this work presents empirical evidence for the existence of the “Great Gatsby curve” within a single country: states with greater income disparities present higher levels of persistence in educational levels across generations. Finally, the paper investigates one specific mechanism behind this correlation: whether higher income inequality might lead to lower investment in human capital among children from socially vulnerable households. The paper delivers robust and compelling results showing that children born into families where the parents have not completed primary education have a statistically significant reduction in their chance of completing the educational system if they live in states with a higher level of income inequality.

Wealth inequality and social mobility: A simulation-based modelling approach

We design a series of simulation-based thought experiments to deductively evaluate the causal effects of various factors on wealth inequality (the distribution) and social mobility (dynamics of the distribution). We find that uncertainty per se can lead to a “natural” degree of inequality and returns-related factors contribute more than earnings-related factors. Based on these identified factors, we construct an empirical, hybrid agent-based model to match the observed wealth inequality measures of the G7 countries and China. The estimated model can generate a power-law wealth distribution for the rich and a positively sloped intra-generational Great Gatsby curve. We also demonstrate how this hybrid model can be extended to a wide range of questions such as redistributive effects of tax and finance.

A Survey on Income Inequality in China

After China’s recent great success in eliminating absolute poverty, addressing relative income inequality becomes a more important issue. This survey finds that income inequality rapidly increased in the first three decades since 1978 but stabilized and slightly declined in the past decade, consistent with the well-known Kuznets hypothesis. In addition to documenting the trend and patterns over time and across groups and regions, seven sources of income inequality are systematically discussed with an effort to reconcile and extend the existing literature. Furthermore, a negative correlation is documented between income inequality and intergenerational mobility, consistent with the Great Gatsby curve observed in developed countries. (JEL D31, D63, O15, P36)

The Great Gatsby Curve in education with a kink

This paper investigates the presence of a kink in the relationship between intergenerational mobility in education and inequality in education using a regression kink model with an unknown threshold. We uncover evidence of a regression kink effect in absolute upward mobility of education due to high inequality in education. At lower levels of inequality of parental education the relationship between intergenerational mobility in education and the Gini coefficient of parental education is positive but there exists a critical point over which the slope of the relationship becomes negative. This finding is consistent with the presence of multiple regimes (equilibria) in the cross-country intergenerational mobility process.

Positional competition: A theory of the Great Gatsby curve and the Easterlin paradox

This paper provides a novel theory that simultaneously explains the Great Gatsby curve and the Easterlin paradox, demonstrating that these two phenomena could be driven by the same mechanism. I model positional competition, in which productive opportunities are allocated according to relative performance, as a Nash equilibrium outcome of agents reacting optimally to a distribution of productive opportunities. Positional competition is not a zero-sum game and its intensity is endogenously determined. The distribution of income and intergenerational mobility are also endogenously determined, with income following a power law distribution. As productivities become more dispersed, optimizing agents respond by competing more intensely with each other. This endogenous intensification lies at the heart of my explanation for both the Great Gatsby curve and the Easterlin paradox.

Experience of social mobility and support for redistribution: Beating the odds or blaming the system?

How does the experience of social mobility affect people's distributive preferences? Using cross-country survey data and a survey experiment, I examine the effects of experienced social mobility on support for redistribution. The results indicate an asymmetric relationship - experiencing downward mobility increases support for redistribution while experiencing upward mobility does not affect distributive preferences. In line with a common attribution bias, the self-serving bias, those with negative mobility experiences 'blame the system' and extrapolate from their negative experience onto society at large, which increases their demand for redistribution. Conversely, those who experienced positive mobility believe they `beat the odds' and do not extrapolate from their experience onto perceptions of societal mobility, leading to no less support for redistribution. This finding suggests significant implications at the aggregate and a potential demand-side explanation for the Great Gatsby Curve: As overall absolute mobility decreases (increases), ceteris paribus, demand for redistribution also decreases (increases).

A Nonparametric Nonclassical Measurement Error Approach to Estimating Intergenerational Mobility Elasticities

This article provides a framework for estimating intergenerational mobility elasticities (IGEs) of children’s income with respect to parental income. We allow the IGEs to be heterogeneous, by leaving the relationship of parental and child incomes unspecified, while acknowledging and addressing the latent nature of both child and parental permanent incomes and the resulted life-cycle bias. Our framework enables us to test the widely imposed assumption that the intergenerational mobility function is linear. Applying our method to the Panel Studies of Income Dynamics data, we decisively reject the commonly imposed linearity assumption and find substantial heterogeneity in the IGEs across the population. We confirm an important finding that the IGEs with respect to parental income exhibit a U-shape pattern, which is occasionally highlighted in the analysis using transition matrices. Specifically, there is a considerable degree of mobility among the broadly defined middle class, but the children of both high- and low-income parents are more likely to be high- and low-income adults, respectively. This result also provides insights into the (intertemporal) Great Gatsby curve, suggesting that a higher level of inequality within one generation may lead to a higher level of social immobility in the next generation in the United States.

Positional Competition: A Theory of the Great Gatsby Curve and the Easterlin Paradox

This paper provides a novel theory that simultaneously explains the Great Gatsby curve and the Easterlin paradox, demonstrating that these two phenomena could be driven by the same mechanism. I model positional competition, in which production opportunities are allocated according to relative performance, as a Nash equilibrium outcome of agents reacting optimally to a distribution of production opportunities. Positional competition is not a zero-sum game and its intensity is endogenously determined. The distribution of income and intergenerational mobility are also endogenously determined, with income following a power law distribution. As productivities become more dispersed, optimizing agents respond by competing more intensely with each other. This endogenous intensification lies at the heart of my explanation for both the Great Gatsby curve and the Easterlin paradox.

In Praise of Snapshots

The conventional justification for moving from income distribution to intergenerational mobility analysis is that the movie encompasses the snapshot and is normatively superior as the basis for assessing policy. Such a perspective underpins many an argument for shifting the focus from income redistribution, which is said to equalize outcomes, to equalizing opportunity by increasing mobility through such policies as equal provision of public education. This paper argues that this perspective can be misleading. It shows that normative evaluation of mobility in any event often falls back on a snapshot perspective. Further, the snapshot itself often contains the seeds of the movie, as posited in the Great Gatsby Curve. Income redistribution can itself improve mobility even if that is the only objective. The paper thus speaks in praise of snapshots.

Still Great: Subjective Intergenerational Mobility and Income Inequality

AbstractIn recent years, the authors of several studies have established that income inequality is negatively associated with intergenerational income mobility in a phenomenon known as “The Great Gatsby Curve.” Yet, extant research on the effects of inequality and social mobility on people’s perceptions and social and political behavior has yielded contradicting results. In light of these inconsistencies, the aim of the current study was to evaluate the association between income inequality and subjective intergenerational mobility. Using data from 40 countries, the effect of income inequality on subjective mobility was examined, along with their combined effect on views regarding redistribution. The results indicated that income inequality increases mainly subjective downward mobility. The effect of subjective mobility on the attitudes toward redistribution was found to be substantial, but there were no significant results highlighting an interaction between inequality and subjective mobility. The results show how individual perceptions of opportunity inequalities are affected by the structural constraints of society. The social implications of these results are discussed herein.