The Great Gatsby Curve

67 Pages Posted: 23 Feb 2022

See all articles by Steven N. Durlauf

Steven N. Durlauf

University of Chicago; National Bureau of Economic Research (NBER); Korea Development Institute (KDI)

Andros Kourtellos

University of Cyprus - Department of Economics; University of Bologna - Rimini Center for Economic Analysis (RCEA)

Chih Ming Tan

University of North Dakota - Nistler College of Business & Public Administration - Department of Economics & Finance

Multiple version iconThere are 2 versions of this paper

Date Written: February 21, 2022

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 Classification: D3,H0,J0,R0

Suggested Citation

Durlauf, Steven N. and Kourtellos, Andros and Tan, Chih Ming, The Great Gatsby Curve (February 21, 2022). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2022-29, Available at SSRN: https://ssrn.com/abstract=4041275 or http://dx.doi.org/10.2139/ssrn.4041275

Steven N. Durlauf (Contact Author)

University of Chicago ( email )

1155 East 60th Street
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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Korea Development Institute (KDI) ( email )

Andros Kourtellos

University of Cyprus - Department of Economics ( email )

75 Kallipoleos Street
P.O. Box 20537
1678 Nicosia
Cyprus

University of Bologna - Rimini Center for Economic Analysis (RCEA) ( email )

Via Patara, 3
Rimini (RN), RN 47900
Italy

Chih Ming Tan

University of North Dakota - Nistler College of Business & Public Administration - Department of Economics & Finance ( email )

3125 University Ave, Stop 8369
Grand Forks, ND 58202-8369
United States

HOME PAGE: http://https://und.edu/directory/chihming.tan

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