Inequality and Mobility

John Hassler, Sevi Rodriguez Mora, J. Zeira

Research output: Working paperDiscussion paper


Acknowledging that wage inequality and intergenerational mobility are strongly interrelated, this paper presents a model in which both are jointly determined. The model enable 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.
Original languageEnglish
PublisherEdinburgh School of Economics Discussion Paper Series
Number of pages37
Publication statusPublished - Jun 2007

Publication series

NameESE Discussion Papers


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