Understanding Intergenerational Mobility : Inequality, Student Aid and Nature-Nurture Interactions

Sammanfattning: Essay I: A body of evidence has emerged in the literature on intergenerational mobility documenting that unequal countries experience less social mobility: a relationship known as the Great Gatsby Curve. In this paper I estimate the Great Gatsby Curve within Sweden across 125 commuting zones and 20 cohorts, exploiting both cross-sectional and longitudinal variation. I find that children who were exposed to higher levels of inequality during childhood experienced less social mobility as adults, thereby confirming the existence of a Great Gatsby Curve in Sweden. I also present new evidence on the underlying mechanisms of the Great Gatsby Curve. By decomposing intergenerational mobility into separate transmission channels, I find that the Great Gatsby Curve is exclusively driven by the mediating effect that children's educational attainment and development of cognitive and non-cognitive skills has on the persistence of income across generations. Hence, the results suggest that adverse effects of inequality on mobility can be alleviated by policies that target children's educational attainment and development of cognitive and non-cognitive skills.