The Short and Long Run Dynamics of the Great Gatsby Curve

Diego Battiston, Stephan Maurer, Andrei Potlogea and Sevi Mora
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Sevi Mora: CUNEF Universidad, University of Edinburgh and CEPR

No 324, Edinburgh School of Economics Discussion Paper Series from Edinburgh School of Economics, University of Edinburgh

Abstract: The strong evidence in support of the Great Gatsby Curve (i.e. the negative crosssectional relationship between intergenerational mobility and inequality) seems to be at odds with the fact that large increases in inequality in the US have not resulted in decreases in mobility. We tackle this puzzle by measuring, for the first time, a dynamic version of the 'Great Gatsby Curve' that relates changes in inequality to changes in intergenerational income mobility. We find that across US counties and during the last century the relationship is weak and unstable over relatively short intervals of two decades, but negative and significant over a longer period of almost a century. The historical record suggests that if the large increase of inequality observed in the US does not reverse, this may result in substantially lower socioeconomic mobility in the long term, even if mobility has not decreased yet.

Keywords: Intergenerational Mobility; Inequality; Great Gatsby Curve. (search for similar items in EconPapers)
JEL-codes: J62 N12 N52 R11 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2025-09
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Working Paper: The short and long run dynamics of the Great Gatsby Curve (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:edn:esedps:324

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