Corak presents a lot of evidence of a correlation between higher levels of inequality and a lower probability of intergenerational 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 similar levels of intergenerational mobility in the middle of their income distributions but very different levels of intergenerational mobility in the top and bottom deciles (Corak 2013, 83).
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.
Professor Brown led us off by asking why we care about mobility. Alexa said that it gives people hope and that it allows us to blame others for their poverty (a bit of a double edged sword, if you will). Jonathan said that meritocracy gives people control over how their lives will turn out. Niyati had a similar thought: intergenerational mobility means your life isn’t predetermined. By contrast, in caste systems, children can’t be anything other than what their parents were.
Ali was less sanguine about some of this. He pointed out that the genetic lottery is operating in the background. Those who do well through their own efforts in a meritocratic system will be the ones who were fortunate to have skills that they chose to use.
I said that you might want to have mobility for social reasons rather than individual ones. My assumption was that a lot of intergenerational mobility is incompatible with a class system. Clyde didn’t buy what I was selling. He noted, correctly, that the whole point of mobility is that there are different classes. The idea is that people move from one to the other. I think that I had in mind what Niyati meant: classes that are determined by family membership, such that you can’t leave the class you were born into.
Katya inquired as to whether there could be class distinctions based on merit. “We’re the talented ones,” for example. I don’t see why not.
One thing I took away from this is that the term “class” doesn’t have an obvious meaning. In fact, it can refer to a bunch of different things: annual income, wealth, behavior, social status, educational attainment, race or ethnicity, and probably a bunch of other things.
To return to Professor Brown’s question, about why we care about intergenerational mobility, the thrust of it was that there are reasons for caring about mobility that aren’t captured by Corak’s study.
For instance, suppose that what people mean by “mobility” is that their children will have more comfortable lives than they had. A society could achieve this even if it is not easy for children to move into a higher relative position in the income distribution.
Prof. Brown was not sure that she cared about the ability of people to move from the bottom to the top.
Katya pointed out that politica power goes to the top. That’s a reason for caring about access to that position. It’s also a reason to try to limit the power held by the top X% since, by definition, there will always be (100 - X)% of the population who aren’t in that slice.
Finally, we had a question about what explains the difference between the US and Canada. Professor Brown said one important difference is the quality of secondary education. In the US, Corak’s work suggests, you need a college degree to get a good job while in Canada a high school diploma is sufficient. I said that we could test this by looking at the auto industry, since it operates on both sides of the border.
Two other things came to my mind:
Many super earners work in finance. The Canadian super earners might be super earning in New York or London rather than Toronto or Montreal.
Canada’s socialized health care system probably holds down the wealth of doctors and the cost of health care to everyone else. That could keep a lot of wealth in middle class pockets that would otherwise go to buy vacation houses for doctors.
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 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.