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How to Slide Down the ‘Great Gatsby Curve’

Authors:
Publication Date:
Jan 2012
Project Programs:
Social Inequality

The paper explores the inverse relationship between income inequality and intergenerational mobility which, when represented in graph form, has been dubbed the “Great Gatsby Curve.” The paper first explains the statistic commonly used to measure intergenerational mobility, the intergenerational elasticity of income, and discusses how it relates to the common understanding of opportunity. Corak then describes the three broad institutions that determine mobility and opportunity: the family, the labor market, and the state. The paper then shows how income inequality interacts with these institutions and explains how higher levels of inequality lead to lower levels of mobility. Corak concludes by arguing that the current generation of Americans will have much lower rates of opportunity due to the significant increase in income inequality and that the United States will not slide down the “Great Gatsby Curve,” toward higher levels of opportunity, unless policy makes a concerted effort to enact mobility-enhancing policies.

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