Inequality and mobility |
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Authors: | John Hassler José V Rodríguez Mora |
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Institution: | (1) Institute for International Economics Studies (IIES), Stockholm University, Stockholm, Sweden;(2) Centre for Economic Policy Research, 53–56 Great Sutton Street, London, EC1V 0DG, UK;(3) University of Southampton, Southampton, UK;(4) Universitat Pompeu Fabra, Barcelona, Spain;(5) University of Edinburgh, Edinburgh, UK;(6) Hebrew University of Jerusalem, Jerusalem, Israel |
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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. |
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Keywords: | Intergenerational mobility Inequality Educational policy |
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