Today, The White House released the Great Gatsby Curve on its Tumblr.
"The Great Gatsby." You’ve probably heard of it — a novel by F. Scott Fitsgerald and now a movie (again) that highlights the inequality and class distinctions in America during the Roaring 20s.
But, unless you’re an economist, you’ve likely never heard of The Great Gatsby Curve, introduced in a speech last year by Alan Krueger, Chairman of the Council of Economic Advisors.
So what is it, then? As Chairman Krueger explained in his speech, The Great Gatsby Curve illustrates the connection between concentration of wealth in one generation and the ability of those in the next generation to move up the economic ladder compared to their parents.
The curve shows that children from poor families are less likely to improve their economic status as adults in countries where income inequality was higher – meaning wealth was concentrated in fewer hands – around the time those children were growing up.
So why does this matter for the United States? The U.S. has had a sharp rise in inequality since the 1980s. In fact, on the eve of the Great Recession, income inequality in the U.S. was as sharp as it had been at any period since the time of "The Great Gatsby."
“While we will not know for sure whether, and how much, income mobility across generations has been exacerbated by the rise in inequality in the U.S. until today’s children have grown up and completed their careers,” he said, “we can use the Great Gatsby Curve to make a rough forecast.”
Fonte: White House