(2012-02-01) Income Mobility And Inequality

I generally excuse Income Inequality in the US on the basis of what I assume to be greater Income Mobility.

But Alan Krueger suggests that our mobility may not be too good, either.

{{http://milescorak.files.wordpress.com/2012/01/figure-2-great-gatsby-curve.png|gatsby|width=288}}

But Reihan Salam challenges the calculations and correlations. For another illustration of how imprecise Gatsby Curves are for this sort of exercise, take a look at the last three rows of Jo Blanden’s Table 5. The rows provide 18 estimates of mobility-inequality correlations, using 6 different sets of mobility estimates and 3 different income Ginis. If Miles and Justin are right, these 18 estimates should be similar. But they instead range from -0.15 to 0.87. That is to say, the Gatsby Curves are all over the place.

• also: Noah Smith is the only person who has attempted to defend Krueger’s claim that the Middle Class has shrunk, which obscured the point that it has shrunk by his definition because more people are now richer than middle class. Noah claims that this claim isn’t deceptive at all, that it is narrowly true and illustrates a point about rising inequality. Huh?

And Tyler Cowen notes that many varieties of causation could be at play here.