The Great Gatsby Curve: Upward Mobility, Persistence and Inequality
This paper revisits the Great Gatsby curve that connects inequality to mobility, using panel data spanning several countries and time periods. Existing literature observes that the intergenerational elasticity of earnings falls as inequality rises, implying that mobility (viewed as the negative of that elasticity) is negatively correlated with inequality. In sharp contrast, we show that measures of upward mobility, axiomatically aligned with progressivity in income growth rates, are robustly and positively associated with baseline inequality. While there is no contradiction here, our study highlights crucial differences between mobility measures based on (lower) persistence and those based on growth progressivity, and asks the reader to align their choice of measure with foundational criteria that they feel best describe “mobility". Our findings offer a re-interpretation of the Gatsby curve through the lens of shared prosperity, and have implications for the evolution of inequality within countries.
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