INTERGENERTIONAL MOBILITY IN THEORY (AGAIN)
We have reviewed empirical studies that have revealed three patterns in the intergenerational income elasticity and other indicators of intergenerational mobility: variation over time, variation across space, and variation across the parental income distribution.
These findings have interacted with economic theory, and we need to review recent papers that have revisited the Becker-Tomes model to account and explore these patterns.
The Nybom-Stuhler paper helps us to understand how we should interpret time-series variation in the intergenerational elasticity, or lack of it for that matter.
In this lecture we study papers that adapt the model to explicitly account for spatial and distributional variation in order to make sense of the Great Gatsby curve. You need to understand how these models account for the non-linearities that must lie at the heart of this curve, and imagine the refutable hypotheses that they then generate. Download the class presentation which focuses on the Becker-Kominers-Murphy-Spenkuch paper.
The student led discussion will bring this theme into relief by examining Chapter 4 in Fair Progress, “Pathways to Intergenerational Mobility in Education and Income.”
Becker, Gary, Scott Duke Kominers, Kevin M. Murphy, and Jörg L. Spenkuch (2018). “A Theory of Intergenerational Mobility.” Journal of Political Economy. Vol. 126, S1, pages S7-S25.
Durlauf, Steven N., and Ananth Seshadri (2018). “Understanding the Great Gatsby Curve.” In NBER Macroeconomics Annual 2017, edited by Martin S. Eichenbaum and Jonathan Parker. Vol. 32. Chicago: University of Chicago Press. (and the Comment by Roland Bénabou, pages 394–406).
You can also watch a presentation Steven Durlauf made of his paper at the NBER Macroeconomics Annual Conference.
Economics for public policy 