Friday, May 09, 2014

The Great Gatsby Curve: Does it really exist and is education the key?

by John Jerrim
Thomas J. Alexander Fellow, Directorate for Education and Skills

Income inequality is high and rising in a number of developed and developing countries. There are many potential economic, social and political consequences of this. But perhaps none are more worrisome than the possibility that rising income inequality will limit educational and economic opportunity in the next generation.

This supposed relationship between income inequality and intergenerational mobility has become widely known as the ‘Great Gatsby Curve.’ It is commonly shown using this graph with “Economic mobility” (differences in the chances of “making it” in life between individuals from rich and poor backgrounds) tending to be lower in countries that are more economically unequal.

This finding has caught the imagination of important public policymakers worldwide. It has been widely cited by high ranking public policymakers, best-selling authors  and Nobel Prize winning academics. But does this Great Gatsby relationship really exist? I have previously shown how the Great Gatsby Curve is highly sensitive to a number of data issues, and that more robust evidence using more cross-nationally comparable data is needed. Furthermore, if this relationship does exist, what are the mechanisms driving it? Academics have long argued that socio-economic inequality in educational attainment is likely to play a key role in economic mobility. But could this also explain why there is a link between income inequality and intergenerational mobility, and thus the presence of the Great Gatsby Curve?

I am attempting to answer these important policy questions during my OECD Thomas J. Alexander Fellowship. Using the Programme for International Assessment of Adult Competencies (PIAAC) dataset, I am investigating how the link between family background, educational attainment and pay in later life varies across more than 20 OECD countries. These results are then compared to external information on income inequality drawn from the Luxemburg Income Study  to establish whether there is indeed a link between economic inequality, educational attainment and social mobility.

I am currently two months into my fellowship at the OECD offices/headquarters in Paris, and have noted several positive influences that the programme has had upon my career. I have benefitted hugely from developing contacts within the OECD, including the other Thomas J. Alexander fellows. These networks have undoubtedly enhanced this piece of research and are going to be pivotal in my future career as a cross-national comparative researcher. The strong links the OECD has with policymakers worldwide has been another significant advantage of the fellowship, providing the ideal platform to showcase my research internationally. The OECD has also provided the time and expert guidance I have needed to develop this project using their databases. This has stimulated a range of further research ideas, which I am intended to pursue in my application for future research grants. 

Programme for International Assessment of Adult Competencies (PIAAC)
OECD Thomas J. Alexander Fellowship
Photo credit: Retro style party / @Shutterstock

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