Inequality and Mobility

John Hassler (), Sevi Rodríguez Mora () and Joseph Zeira ()

ESE Discussion Papers from Edinburgh School of Economics, University of Edinburgh

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.

Date: 2007-09
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Related works:
Working Paper: Inequality and Mobility (2000)
Working Paper: Inequality and Mobility (2002)
Journal Article: Inequality and mobility (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:edn:esedps:165

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