What Mobility Means

Social mobility is the central empirical question behind the idea of the American Dream and its counterparts in every advanced economy. The sociological and economic literatures frame the question precisely: to what extent does the position a person occupies in the income, wealth, or class distribution depend on the position their parents occupied? A society in which parental position strongly predicts child position has low mobility; one in which the association is weak has high mobility. The concept is not about whether individuals can rise in any particular case but about the systemic relationship between parents and children across a whole population.

Absolute versus relative mobility. The literature distinguishes two senses in which children may do better or worse than their parents. Absolute mobility concerns whether a child's real income or standard of living exceeds the parent's at the same age. In a growing economy, most children can out-earn their parents even if the relative ordering of families is entirely stable — a rising tide can lift all boats while leaving their order unchanged. Relative mobility concerns position in the distribution: does the child of a bottom-quintile parent have a realistic chance of reaching the top quintile, and conversely. A society can score well on one measure and poorly on the other. In the United States in the mid-twentieth century, absolute mobility was very high — roughly 90% of children born around 1940 earned more in real terms than their parents (Chetty, Grusky, Hell, Hendren, Manduca, and Narang 2017, pp. 398-400). By the 1980 birth cohort, the share had fallen to about 50%. Relative mobility — the probability of a child from the bottom quintile reaching the top quintile — has been approximately flat across the same decades (Chetty, Hendren, Kline, Saez, and Turner 2014, pp. 1554-1556).

Intergenerational income elasticity. The standard quantitative measure of relative mobility is the intergenerational income elasticity (IGE): the coefficient in a regression of log child income on log parent income, typically measured at midlife for both generations to stabilize income rankings. An IGE of 0 would indicate perfect mobility — no association between parent and child income. An IGE of 1 would indicate perfect reproduction — every child exactly inherits the parental position. Empirical estimates for contemporary high-income countries range from about 0.15 in Denmark and Norway to about 0.50 in the United States and United Kingdom (Corak 2013, pp. 82-84). The rank-rank correlation is a related, increasingly preferred measure that does not depend on assumptions about the log-linear form and is easier to compare across distributions with different variance (Chetty et al. 2014, pp. 1556-1560).

The Great Gatsby Curve. Plotting countries' IGE against their level of income inequality (Gini coefficient or top-quintile share) reveals a striking positive relationship: more unequal societies tend to be less mobile. Alan Krueger, then chair of the Council of Economic Advisers, named this pattern the Great Gatsby Curve in a 2012 address (Krueger 2012). Miles Corak's subsequent work formalized the association across an expanded country sample and examined its robustness (Corak 2013, pp. 86-90). The correlation is not a mechanical necessity — inequality and mobility are conceptually distinct — but an empirical regularity that demands explanation. Several mechanisms have been proposed: larger gaps between rungs of the ladder make each rung harder to cross; high inequality enables affluent families to invest more heavily in positional goods (elite schooling, housing in advantaged areas) that secure their children's rank; and institutional environments that tolerate high inequality are often the same ones that under-invest in public goods like early education and accessible healthcare that would otherwise equalize starting positions (Björklund and Jäntti 2009, pp. 491-495).

The distinction between absolute and relative mobility is consequential for how we interpret the evidence. A child who out-earns their parents but remains in the same quintile of the distribution has experienced absolute mobility without relative mobility. A family that falls a quintile in a shrinking economy has experienced relative mobility without absolute mobility. Public discourse often conflates the two, and the resulting confusion is one reason empirical results about mobility are so contested.