How the Great Gatsby Curve Explains Social Mobility

Understanding the Great Gatsby Curve

The figure, known as the “Great Gatsby Curve,” plots two variables: the x-axis measures inequality through the Gini coefficient, where higher values indicate greater inequality, while the y-axis measures intergenerational elasticity of income (IGE), where higher values mean less social mobility.

The main pattern is clear and positive — countries with higher inequality tend to have lower intergenerational mobility, meaning that in more unequal societies, a child’s economic future is more strongly determined by their parents’ income. Looking at specific countries, Nordic nations such as Denmark, Norway, Finland, and Sweden cluster in the low inequality/high mobility corner, while Latin American countries like Brazil, Peru, Chile, and Argentina appear in the opposite extreme. The United States and United Kingdom fall somewhere in the middle, showing moderate-to-high levels of both inequality and low mobility. Overall, the figure suggests that inequality today tends to solidify into immobility tomorrow, making it harder for children to escape the economic circumstances they are born into.

Policy Recommendation: Universal ECEC

As an advisor to a government concerned about both high inequality and low intergenerational mobility, I would recommend implementing a universal early childhood education and care (ECEC) program. This policy consists of publicly funded, high-quality preschool and childcare available to all children from an early age, regardless of family income, similar to the systems already in place in Finland and Denmark.

This intervention directly addresses equality of opportunity by reducing the advantage that wealthier parents currently hold in providing early cognitive and social development to their children. Over time, by giving all children an equal educational foundation, the policy is expected to weaken the link between parental income and children’s future earnings, thereby increasing intergenerational mobility. Simultaneously, by redistributing access to quality education, it contributes to reducing overall inequality. In terms of the figure, a successful implementation of this policy would shift the country’s position toward the upper-left quadrant, reflecting both lower inequality and higher social mobility.