Overview

You talked about Corak’s discussion of the relationship between inequality and intergenerational mobility (Corak 2013). I was in bed so I can’t very well summarize the discussion. Instead, I’ll give you an edited version of the notes from last year.

Corak’s Paper

Corak presents a lot of evidence of a correlation between higher levels of inequality and a lower probability of leaving one’s parents’ place in the income distribution. This is especially pronounced at the tails of the distribution: the high and low ends.

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.

Last year, Prof. Brown said he should have considered race. The US has a history of racially based slavery and then racially based segregation as slavery was unwound. Canada’s history isn’t totally clean, but it doesn’t have anything like that.

Last year, I said that the difference might be due to the larger percentage of immigrants at the bottom of the Canadian distribution or the greater degree of urbanization in Canada. A way to test this would be to compare mobility among immigrants in both countries or to compare US and Canadian cities rather than the countries as a whole.