Higher income inequality is associated with lower mobility between generations.
Krueger's 2012 plot of inequality against intergenerational elasticity across countries. Denmark sits low on both axes, the United States high on both, and the relationship is tight enough to be uncomfortable.
In practice
- A country where the top decile has pulled away shows children's outcomes tracking their parents' more tightly than in flatter neighbours.
- A city with a wide income spread has schools whose intakes sort by postcode, which is the mechanism the curve describes.
- Further reading
- Wikipedia
- Subject
- Economics & Incentives
- Essay
- The regularities money obeys