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.

Inequality and Mobility / Zeira, Joseph; Hassler, J; Mora, J.. - In: JOURNAL OF ECONOMIC GROWTH. - ISSN 0897-1862. - 12(2007), pp. 235-259. [10.1007/s10887-007-9019-x]

Inequality and Mobility

ZEIRA, JOSEPH;
2007

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.
Intergenerational mobility, Inequality, Educational policy
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11385/5385
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