Their Worth
Does the prospect of upward mobility undermine support for redistribution?
Don Moore, Rene Choudhari & Aileen Wu
Journal of Public Economics, August 2025
Abstract:
Despite substantial economic inequality in the United States, many Americans who would benefit from redistributive economic policies vote against them. This opposition could be justified by an exaggerated belief in the prospects of upward mobility. That is, people may oppose higher taxes on the largest incomes and estates because they overestimate the degree to which they would be subject to them. This research employs an experimental approach to studying Americans' beliefs about their own prosperity and correlates these beliefs with support for redistribution. The results are not consistent with the theory that overconfidence about future prosperity impairs Americans' support for redistribution. Instead, people report ideological stances tolerant of economic inequality and opposing redistribution, largely independent of their private economic interests.
The Race Between Education, Technology, and the Minimum Wage
Jonathan Vogel
Quarterly Journal of Economics, August 2025, Pages 1857-1899
Abstract:
What is the effect of the real minimum wage on wages and inequality? I develop a theory that nests the race between education and technology. The theory predicts that the effect of changes in minimum wages is initially small but grows over time. I present empirical evidence of these dynamic effects: the elasticity of real wages grows substantially over a three-year period. I show that minimum wages help rationalize a considerable decline in real wages of low-education workers in the 1980s and play a role in shaping the evolution of the U.S. college premium.
The Great Gatsby Curve: Upward Mobility, Persistence and Inequality
Laura Mayoral, Debraj Ray & Garance Genicot
NBER Working Paper, August 2025
Abstract:
This paper revisits the Great Gatsby curve that connects inequality to mobility, using panel data spanning several countries and time periods. Existing literature observes that the intergenerational elasticity of earnings falls as inequality rises, implying that mobility (viewed as the negative of that elasticity) is negatively correlated with inequality. In sharp contrast, we show that measures of upward mobility, axiomatically aligned with progressivity in income growth rates, are robustly and positively associated with baseline inequality. While there is no contradiction here, our study highlights crucial differences between mobility measures based on (lower) persistence and those based on growth progressivity, and asks the reader to align their choice of measure with foundational criteria that they feel best describe "mobility". Our findings offer a re-interpretation of the Gatsby curve through the lens of shared prosperity, and have implications for the evolution of inequality within countries.
How the Class-Advantaged Fail to Obtain Greater Economic Capital from Their Greater Social Capital
Jessi Streib
Socius: Sociological Research for a Dynamic World, July 2025
Abstract:
How do class-advantaged individuals with more social capital fail to obtain greater economic capital than class-disadvantaged individuals with less? Although stratification scholars often assume that the class-advantaged convert their greater social capital into greater economic capital, social capital researchers regularly find no wage benefit from its possession or use. Drawing on the case of college students entering the midtier business labor market, this study uncovers how overlooked properties of fields contribute to this phenomenon. Fields that hide information about who can help, how to get ahead, and which jobs pay the most neutralize the class-advantaged's social capital. In these fields, the class-advantaged do not know whom to ask for help, and without knowledge of how or where to get ahead, their connections often give them ineffective advice and lead them into low-paying as well as high-paying positions. By highlighting the role of hidden information, this study challenges assumptions about the straightforward conversion of social into economic capital and shows how the class-advantaged's seeming advantages break down.
Polycentric Status Contests
Vlad Tarko
University of Arizona Working Paper, August 2025
Abstract:
As societies become richer, and basic needs are satisfied, zero-sum positional contests gain more prominence, while the regular positive-sum benefits of markets subside in the background. As long argued by Hirsch, Frank and others, the institutions for managing resource scarcity and spurring economic growth, i.e. the institutions of capitalism, may not be particularly well-suited for managing the type of scarcity associated with positional goods. The long-term equilibrium of rich societies may not be as peaceful as many assume if they become overrun by status competitions. This paper provides a typology of positional goods, explaining why some positional competitions are worse than others, and a rent-seeking model of the supply response to positional goods' price changes. The model leads to surprisingly optimistic predictions: markets tend to fragment the worst kinds of positional goods into competing hierarchies of status, tend to dissipate and eliminate some positional goods, and tend to turn the most damaging status competitions into more beneficial prestige competitions. Government interventions, by contrast, often attempt to prop-up monopolistic status hierarchies.
Elite Incomes Around the World: Command over Tradables, Nontradables and Labour
Paul Segal & Michail Moatsos
Journal of Economic Inequality, June 2025, Pages 457-481
Abstract:
This paper shows that cross-country comparisons of elite incomes vary widely and systematically depending on the conception of real income used. It is well known that between-country income inequality is higher using market exchange rates than PPP exchange rates, due to a combination of traded sector bias and the Balassa-Samuelson effect, and we empirically confirm that this is the case for comparing top 1 percent incomes across countries. In contrast, we argue that measuring real incomes of elites using entitlements over labour (ELs), which take local wage costs as the numeraire, leads to the opposite effect: since the non-traded sector is relatively labour-intensive, incomes in the sense of ELs demonstrate non-traded sector bias relative to PPP incomes. They therefore provide a complement, or opposite bound, to the traded-sector bias of market exchange rates. Consistent with this argument, we find that between-country inequality among the world's national elites is indeed lower using ELs than either PPP or market exchange rates. But elite incomes in ELs do not merely converge: elites in poorer countries leapfrog or overshoot their rich country counterparts, enjoying higher real incomes in terms of their command over domestic labour.
Genetics and Socioeconomic Status: Some Preliminary Evidence on Mechanisms
Leandro Carvalho
Journal of Political Economy Microeconomics, August 2025, Pages 429-476
Abstract:
Does genetics influence one's economic prospects? I exploit randomness in the genetic transmission from parents to offspring to estimate causal genetic effects. The genetic measure is the polygenic index (PGI) for educational attainment. High-PGI individuals have higher incomes largely because of their schooling and occupational choices: they get more education and sort into better-paying occupations. Genetics seems to drive individual differences in the marginal benefits and costs of schooling. The evidence suggests that fluid intelligence and self-control partly mediate the relationship between the PGI and education. Genetic effects are economically meaningful, comparable in size to effects of family environment.
The Breakdown of the English Society of Orders: The Role of the Industrial Revolution
Cara Ebert et al.
NBER Working Paper, August 2025
Abstract:
We study the role of the English Industrial Revolution in promoting social mobility and ending the society of orders: one based on rigid social categories and regulated by inherited characteristics. We combine two new datasets on individual wealth holdings before and after the Industrial Revolution. Our main finding is that noble and gentry titles as well as surnames explain significantly less of the variation in wealth after the Industrial Revolution. Moreover, these declines are substantially larger in the parts of England most impacted by the Revolution. We also explore the extent to which different characteristics predict being rich. We then study a key facet of this increased social mobility - geographical and occupational mobility. We show that people with surnames that were more mobile tended to be in the north and working in manufacturing. Moreover, areas that experienced greater outward mobility were more urbanized; less agrarian; had institutionalized markets; more gentry; were poorer (as proxied by tax revenues); and were more likely to be the residence of a member of parliament.