The Great Gatsby Curve

Steven Durlauf, Andros Kourtellos () and Chih Ming Tan

No 29761, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper provides a synthesis of theoretical and empirical work on the Great Gatsby Curve, the positive empirical relationship between cross-section 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, including models on family investments, skills, social influences, political economy, and aspirations are developed, 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.

JEL-codes: D3 H0 J0 R0 (search for similar items in EconPapers)
Date: 2022-02
New Economics Papers: this item is included in nep-ban, nep-fdg, nep-lab, nep-ltv and nep-pbe
Note: CH ED EFG PE
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Citations: View citations in EconPapers (19)

Published as Steven N. Durlauf & Andros Kourtellos & Chih Ming Tan, 2022. "The Great Gatsby Curve," Annual Review of Economics, vol 14(1).

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Journal Article: The Great Gatsby Curve (2022)
Working Paper: The Great Gatsby Curve (2021)
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