Intergenerational mobility between and within Canada and the United States

Intergenerational mobility is lower in the United States than in Canada, but the border only partially distinguishes the two countries with mobility varying significantly within each. The within-country differences and similarities hint at some of the reasons why the United States has lower social mobility than many other rich countries.

This is the main theme of a study released by the National Bureau of Economic Research, based upon Canadian data my co-authors and I constructed with the cooperation of Statistics Canada. Our research offers a more accurate comparison between these two countries than any cross-country comparisons made in the literature to date: tax-based administrative data, used to define similar measures of income, and coming close to covering the total population of similarly aged young people and their parents.

We cluster more than 1,000 communities in these two countries—709 American Commuting Zones and 288 Canadian Census Divisions—into four broad regions according to their similarity across a comprehensive set of five different measures of intergenerational income mobility, all referring to the strength of the tie between parent incomes and child adult incomes.

Source: Connolly, Corak, Haeck (2019, Figure 7). Click on image to enlarge.

Continue reading “Intergenerational mobility between and within Canada and the United States”

Rest in peace Alan Krueger

Alan Krueger did everything an economist should aspire to achieve: strong research grounded in a solid understanding of theory and statistical method; framed to uncover facts important to the way people lead their lives, to the challenges they face; and communicated to resonate among policy makers, compelling them to do better for their citizens.

Writing in 1924, upon the death of his teacher and mentor Alfred Marshall, the great British economist John Maynard Keynes said that the “study of economics does not seem to require any specialised gifts of an unusually high order. Is it not, intellectually regarded, a very easy subject compared with … philosophy and pure science? Yet good, or even competent economists are the rarest of birds. An easy subject at which very few excel !”

And just as Keynes said of Marshall, that this paradox is explained by the fact that the “master-economist” needs to embody “a rare combination of gifts,” so to it can be said of Alan Krueger, the Princeton University labour economist who died on March 16th, 2019 at the age of 58. Continue reading “Rest in peace Alan Krueger”

How The Great Gatsby Curve got its name

Great Gatsby Curve

On January 4th, 2012 The New York Times published an article called “Harder for Americans to Rise from Lower Rungs.” I had spent a considerable amount of time during the New Year’s holidays talking with Jason DeParle about the comparative literature on intergenerational income mobility, and was pleased to see his article on the front page.

So pleased that I emailed Alan Krueger, the Princeton University economist who at the time was the Chairman of the Council of Economic Advisors, to draw his attention to it, though I don’t know why I imagined that Krueger and his staff in the White House would not be reading The Times.

That is how “The Great Gatsby Curve” was born.

Continue reading “How The Great Gatsby Curve got its name”

Inequality, life chances, and public policy

Lecture series Inequality and Miles Corak European Investment Bank Luxembourg

We should care about inequality because it has the potential to shape opportunities for the next generation. My presentation at the European Investment Bank offers a framework for thinking about this relationship, and for understanding why the adult outcomes of children are more closely tied to their family background—with the poor raising the next generation of poor adults, and the rich more likely to see their children to be rich in adulthood—in countries with greater inequality.

Differences in families, labour markets, and public policy all play a role in understanding why the United States and the United Kingdom have relatively less social mobility than many other countries.

Feel free to download the presentation, which will also soon be posted online by the University of Luxembourg.

“Inequality, Life Chances, and Public Policy,” watch the presentation I made at Millersville university

I was very pleased to speak at the 2014 International Policy Conference on the theme “Inequality: Defining our Time?” held at Millersville University on November 6th and 7th, 2014. I spoke on the very kind invitation of Professor Ken Smith and the Department of Economics at Millersville University.

My talk was called “Inequality, Life Chances, and Public Policy: How to Slide Down the Great Gatsby Curve,” and you can watch it here if you have an interest.

These are the associated slides: Inequality Life Chances and Public Policy how to Slide Down the Great Gatsby Curve for Millersville University International Policy Conference

The source for this presentation is an article I published in the Journal of Economic Perspectives called “Income Inequality, Equality of Opportunity, and Intergenerational Mobility

The discussant, who begins speaking at about 47 minutes into the talk, is Professor Antonio Callari of Franklin and Marshall College. He offered some interesting remarks about how the theme of the talk relates to developments in Lancaster PA, where the conference was held.

[ One silly grammatical error that I wish I could take back occurs when I say “the more statistically significant among you,” when my intention was “the more statistically savvy among you.” ]

Why should we care about inequality? Tim Harford nails it in this Financial Times column

Tim Harford nails it in an article called “How the wealthy keep themselves on top.

I set out two reasons why we might care about inequality: an unfair process or a harmful outcome. But what really should concern us is that the two reasons are not actually distinct after all. The harmful outcome and the unfair process feed each other. The more unequal a society becomes, the greater the incentive for the rich to pull up the ladder behind them.

The noted Financial Times columnist, and author of The Undercover Economist, does a great service to readers by pulling a major theme from the series of articles on inequality and the top 1% published in the summer 2013 issue of the Journal of Economic Perspectives.

First, he states that while the “idea that the fat cats simply stole everyone else’s cream is emotionally powerful; it is not entirely convincing.” Then he goes on to note that:

In a well-functioning market, people only earn high incomes if they create enough economic value to justify those incomes. But even if we could be convinced that this was true, we do not have to let the matter drop.

This is partly because the sums involved are immense.

We should care about inequality because of the outcomes. But also because outcomes influence process.

At the very top of the scale, plutocrats can shape the conversation by buying up newspapers and television channels or funding political campaigns. The merely prosperous scramble desperately to get their children into the right neighbourhood, nursery, school, university and internship – we know how big the gap has grown between winners and also-rans.

This is what sticks in the throat about the rise in inequality: the knowledge that the more unequal our societies become, the more we all become prisoners of that inequality. The well-off feel that they must strain to prevent their children from slipping down the income ladder. The poor see the best schools, colleges, even art clubs and ballet classes, disappearing behind a wall of fees or unaffordable housing.

This is exactly what I hoped would be the main message of my article “Income Inequality, Equality of Opportunity, and Intergenerational Mobility” in the Journal of Economic Perspectives symposium, and it is very satisfying to witness a talented journalist articulate these and related ideas with such clarity and precision!