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Tuesday, January 17, 2012

"The Economics of the Great Gatsby Curve"

Miles Corak defends the "Great Gatsby Curve's" illustration of a link between inequality and mobility:

The Economics of the Great Gatsby Curve, by Miles Corak: 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. ...[continue reading point by point defense]...

The bottom line?:

Alan Krueger is entitled to his own views on public policy, but not to his own facts. But this also holds for public policy entrepreneurs in the blogosphere. In this case Krueger got his facts right. ...

    Posted by on Tuesday, January 17, 2012 at 07:23 PM in Economics, Income Distribution | Permalink  Comments (33)


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