A Meta-Regression Analysis of Intergenerational Transmission of Income and the Great Gatsby Curve

• In Event: 362 - Regular Session. Labor Market 2

Abstract

Our overall aim is to understand the association between income inequality and intergenerational transmission of income (degree to which conditions at birth and childhood determine socioeconomic situation later in life). Causality is hard to establish, because both income inequality and inequality in opportunity are results of complex social and economic outcomes. We analyze whether this correlation is observed across countries and time (as well as within countries), in a context of recent increases in income inequality. We investigate Great Gatsby curves and perform meta-regression analyses based on several papers on this topic. Results suggest that countries with high levels of inequality tend to have higher levels of inequality of opportunity. Intergenerational income elasticity has stronger associations with Gini coefficient, compared to associations with top one percent income share. Once fixed effects are included for each country, these correlations lose significance.

Authors

• Ernesto F. L. Amaral, RAND Corporation

• Francisco Perez-Arce, RAND Corporation