The inequality cycle

In a comment the other day I alluded to the impossibility of having a society that’s both a perfect meritocracy and highly unequal. I hadn’t actually realised how strong the relationship between these two aspects was, until seeing Paul Krugman’s post “The Great Gatsby Curve” today. Here’s the chart that sums it up:

The surprisingly neat linear relationship between inequality and social immobility

Note that “elasticity” here refers to the elasticity of a child’s earnings where the controlling variable is the parents’ earnings. The relationship is both stronger and more straightforwardly linear than I had expected.

As always with these things, the points that don’t fall right on the line are interesting to consider: particularly the UK, France & Japan, which had very similar Gini coefficients in 1985, but a fairly wide range of intergenerational earnings elasticity. I have no particular insight into why this would be so, and I’m interested in any ideas you might have.

This entry was posted in Politics and tagged , , , , , . Bookmark the permalink.