Economic Inequality and Social Mobility in Developed Economies

Abstract

The paper investigates the relationship between economic inequality and social mobility in the industrialized economies using a mixed-method approach of research methodology, which uses longitudinal quantitative research with a qualitative interpretation of the findings using an institutional approach. The research examines how income inequality difference affects intergenerational mobility using cross-national panel data, controlling the critical socioeconomic and policy-related factors. The results are always of negative correlation between high levels of economic inequality and social mobility, indicating that the culture that is marked by wider income gaps usually experiences lower levels of upward mobility. The findings also indicate that the variance between the countries is quite high, and that when welfare state is robust, educational system is inclusive, and institutions supportive of labor market, this association is much less strong. The economic models confirm the soundness of these results in different measures and assumptions, but the qualitative insights explain the causes of the different resilience of the developed economies to the mobility diminishing effects of inequality. The paper concludes that economic inequality is a critical and yet not a sole variable that influences social mobility. It also concludes that the institutional design and the public policy play a very crucial role in defining the opportunities in the advanced countries.