The Great Gatsby Curve

Definition

The Great Gatsby Curve illustrates the relationship between income inequality and intergenerational mobility, showing that higher levels of income inequality tend to correlate with lower levels of mobility. This concept highlights how socioeconomic status can impact individuals' ability to improve their economic situation compared to their parents, suggesting that in societies with significant inequality, children from disadvantaged backgrounds face greater barriers to upward mobility.

5 Must Know Facts For Your Next Test

1. The Great Gatsby Curve was popularized by economist Alan Krueger in 2012, emphasizing the link between inequality and mobility in various countries.
2. Countries with high income inequality, like the United States, tend to have lower rates of intergenerational mobility compared to more equitable societies like the Nordic countries.
3. The curve suggests that children from low-income families are less likely to achieve upward mobility when they grow up in a highly unequal society.
4. Policymakers often use the Great Gatsby Curve to advocate for policies aimed at reducing income inequality as a means to improve social mobility.
5. Factors such as access to quality education, healthcare, and family background significantly contribute to the variations in mobility seen along the Great Gatsby Curve.

Review Questions

• How does the Great Gatsby Curve illustrate the relationship between income inequality and intergenerational mobility?
  • The Great Gatsby Curve demonstrates that higher levels of income inequality are associated with lower rates of intergenerational mobility. This means that in societies where wealth is concentrated among a few, children from lower-income families struggle more to move up economically compared to their parents. The curve provides a visual representation of this phenomenon, highlighting the barriers faced by those from disadvantaged backgrounds in achieving economic advancement.
• What implications does the Great Gatsby Curve have for policymakers aiming to enhance social mobility?
  • The Great Gatsby Curve suggests that addressing income inequality is crucial for improving social mobility. Policymakers can focus on implementing strategies such as improving access to education and healthcare, which can provide greater opportunities for low-income families. By tackling the structural barriers that perpetuate inequality, policymakers can help create a more level playing field where individuals have a fairer chance at upward mobility regardless of their socioeconomic background.
• Evaluate how different countries exemplify the Great Gatsby Curve, particularly in terms of their income distribution and social mobility outcomes.
  • Countries like the United States exemplify the Great Gatsby Curve through their high levels of income inequality and correspondingly low rates of intergenerational mobility. In contrast, Scandinavian countries display lower income inequality and higher mobility rates. This evaluation highlights how systemic factors such as social safety nets, tax policies, and public services contribute to these outcomes. By comparing these examples, we can see how different approaches to economic policy impact both inequality and the ability of individuals to improve their circumstances.

Related terms

Income Inequality: The unequal distribution of income within a population, where a small percentage controls a large portion of wealth, leading to disparities in economic opportunities.

Intergenerational Mobility: The ability of individuals or families to move up or down the social ladder relative to their parents' socioeconomic status.

Social Stratification: The hierarchical arrangement of individuals or groups in society based on factors such as wealth, power, and prestige.