Two-way Causality and the Slope of the Great Gatsby Curve: Evidence from US Regional and Cross-country Data
This paper investigates the slope of the Great Gatsby Curve, while allowing for the two-way causal relationship between mobility and inequality and controlling for a host of potential determinants of the relationship. Our estimation results based on US regional data indicate that the effects of ineq...
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| Published in | 재정학연구, 13(3) pp. 155 - 192 |
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| Main Authors | , |
| Format | Journal Article |
| Language | English |
| Published |
한국재정학회
01.08.2020
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| Subjects | |
| Online Access | Get full text |
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| Summary: | This paper investigates the slope of the Great Gatsby Curve, while allowing for the two-way causal relationship between mobility and inequality and controlling for a host of potential determinants of the relationship. Our estimation results based on US regional data indicate that the effects of inequality on mobility in instrumental variable estimations are more than three times larger than those in comparable OLS estimations. The estimated relationship between mobility and inequality using US regional data displays a stable equilibrium. The identified multiplier effect indicates that policies for one would have a positive effect on the other, implying that redistributive policies may have the additional benefit of improving mobility. Estimation results using the cross-country data show a strong positive association of mobility with public expenditure on tertiary education directed at individuals, indicating the importance of scholarships and student loans in improving mobility. KCI Citation Count: 0 |
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| ISSN: | 1976-8362 2734-0236 |