Tag: Alan Krueger

The Economics of the Great Gatsby Curve

~ MilesCorak ~ 31 Comments

In an article on the Brookings Institution website that was originally posted by the National Review, Scott Winship questions the idea that greater inequality at a point in time is associated with less generational mobility over time — what the Chairman of the Council of Economic Advisors, Alan Krueger, called the “Great Gatsby Curve” in a speech given on January 12th.

Winship’s article does a disservice to a well-established literature on generational mobility by suggesting that the basic information Krueger used is in some sense invalid. Krueger’s Great Gatsby Curve is in fact well-rooted in the labour economics literature, and debate would be better placed addressing the policy implications he draws than to suggest that President Obama’s top economist feels compelled to create his own facts.

So in the spirit of moving evidence-based public policy forward here is a quick review of the underpinning of the Great Gatsby Curve in both theory and practice.

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Here is the source for the “Great Gatsby Curve” in the Alan Krueger speech at the Center for American Progress on January 12

~ MilesCorak ~ 45 Comments

In the speech he gave at the Center for American Progress on January 12th, Alan Krueger, the Chairman of the Council of Economic Advisors, presented the “Great Gatsby” curve: the relationship between inequality and generational earnings mobility, citing in part a 2011 paper of mine.

Here is the draft of the paper from which some of the data he used were drawn, in particular see Figures 1 and 2:

Inequality from generation to generation the United States in comparison

Here is Figure 2, my version of the Great Gatsby Curve for a wider set of countries:

The discussion I offered in an earlier post also uses this information and relates to this theme: Inequality and Occupy Wall Street 5: decline of the American Dream

Here is the text of Krueger’s speech Alan Krueger, The Rise and Consequences of Inequality, Text, and here are the associated slides Alan Krueger, The Rise and Consequences of Inequality, Slides .

[Update: this post was updated on January 27, 2012 with a new version of the text “Inequality from Generation to Generation…” and the associated figure. This text can be cited as:

Miles Corak (2013), “Inequality from Generation to Generation:  The United States in Comparison,” in Robert Rycroft (editor), The Economics of Inequality, Poverty, and Discrimination in the 21st Century, ABC-CLIO.

A complete list of references used to develop the estimates of the Intergenerational Earnings Elasticity is available here: References for intergenerational earnings elasticities. The following is a graph showing the exact values of the estimates.

Update, July 12, 2016: the published version of “Inequality from Generation to Generation …” is available as IZA Discussion Paper No. 9929. ]

Who is Alan Krueger? And why is he speaking for the White House on Inequality?

~ MilesCorak ~ 1 Comment

Alan Krueger is a labour economist who teaches at Princeton University.

On August 29th President Obama appointed him the Chairman of the Council of Economic Advisors, and his appointment was confirmed in November.

In this role he will be giving what is only his second speech on Thursday January 12th at the Center for American Progress in Washington on “The Rise and Consequences of Inequality.”

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