Corak presents a lot of evidence of a correlation between higher levels of inequality and a lower probability of economic mobility, that is, leaving one’s parents’ place in the income distribution. This is especially pronounced at high and low end of the income distribution.
The bulk of his argument is based on a comparison of the US with Canada. These are two very similar countries that have different levels of inequality and different rates of mobility.
Corak suggests that the difference between the US and Canada is due to political decisions. Canada, for instance, spends more on primary and secondary education while the US spends more on higher education. Since higher education does not do as much for mobility as primary and secondary education do, the US has less mobility than Canada does.
Prof. Brown led us off with an explanation of the Gini coefficient. This is a way of measuring inequality.
She said that Corak is addressing a methodological problem with comparing different countries. The solution is something called permanent income. As the philosopher on the team, I’m going to leave it up to you to work that one out.
I think the significance of Corak’s research is that it addresses one common response to inequalities in wealth: inequalities in wealth are OK so long as everyone has an opportunity to get wealthy on their own merits. I don’t think the moral assumption here is obviously correct, but let’s not worry about that now. If Corak is right, inequalities in wealth also reduce mobility. So as society becomes more unequal in wealth, it also becomes more unequal in opportunity.
I asked why Corak thinks equal opportunity is important and I got three answers that all seem right to me.
Crystal said that the idea of economic mobility plays an important role in our society. We even have a name for it: the American Dream. Why does this matter? Presumably people are going to get upset if the dream is exposed as a sham. Piketty put a fair amount of weight on this too. Let’s call this “ideology.”
Remy said that we don’t like the thought that your life isn’t under your own control. We value the ability of individuals to choose whether they are going to work hard and make a lot of money or work less and enjoy more leisure. It’s up to you. I’m going to call this one “individualism.”
Kamyab pointed out that a society with equal opportunity will be more productive than societies with unequal opportunities. A society whose members have equal opportunities will reap the benefits of having all of its most talented members doing their most productive work. Societies that do not give opportunities to large portions of their members do not enjoy the benefit of their productive work. “Productivity” seems right.
Hold this thought for when we get to Rawls.
Corak, Miles. 2013. “Income Inequality, Equality of Opportunity, and Intergenerational Mobility.” Journal of Economic Perspectives 27 (3): 79–102.