productivity, inequality and mobility, andrew leigh
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Presentation by Andrew Leigh, "Productivity, Inequality and Mobility, Andrew Leigh"TRANSCRIPT
Andrew Leigh
PRODUCTIVITY,
INEQUALITY &
MOBILITY
OECD, Paris
How Immobility Hurts Productivity
Misallocation of human capital investment
Choosing the wrong parents is “the biggest market failure
of all” (Heckman)
Misallocation of financial capital
Thin capital markets hurt entrepreneurs with poor parents.
Mismatch in the labour market
Too much emphasis on family means bad hiring decisions.
Andrew Leigh: Productivity, Inequality & Mobility
How Much Mobility Exists?
Andrew Leigh: Productivity, Inequality & Mobility
How Much Mobility Exists?
“In no other country on
earth is my story even
possible”
“It is harder today for a
child born here in
America to improve her
station in life than it is for
children in most of our
wealthy allies”
Barack Obama, 2004 Barack Obama, 2013
Andrew Leigh: Productivity, Inequality & Mobility
What Drives Mobility?
1. Inequality
2. Families
3. Schooling
4. Targeting
Several excellent review papers:
e.g. D’Addio (2008), Causa & Johansson (2009), Corak
(2013)
Andrew Leigh: Productivity, Inequality & Mobility
Mobility & Inequality
Andrew Leigh: Productivity, Inequality & Mobility
Andrew Leigh: Productivity, Inequality & Mobility
Andrew Leigh: Productivity, Inequality & Mobility
Less m
ob
ilit
y →
Andrew Leigh: Productivity, Inequality & Mobility
← L
ess m
ob
ilit
y
Mobility & Families
By the age of three, children of professional parents
have heard 30 million more words from their parents
than those whose parents were long-term welfare
recipients (Hart & Risley 1995).
‘An affluent five-year-old has about the same
vocabulary as an adult living in poverty.’ (Hank
Bounds, Mississippi commissioner of higher
education) Andrew Leigh: Productivity, Inequality & Mobility
Mobility & Families
Affluent families spend more on ‘educational
enrichment’
Rise in single parent families larger among
low-educated parents.
Concerted cultivation vs natural growth
parenting
Andrew Leigh: Productivity, Inequality & Mobility
Mobility & Schooling
Some evidence that higher returns to
education means lower mobility (Solon 2004,
Corak 2013)
Test score dispersion is associated with more
inequality (and therefore less mobility?)
Andrew Leigh: Productivity, Inequality & Mobility
Andrew Leigh: Productivity, Inequality & Mobility
Source: Corak (2013) Source: Leigh (2013)
Mobility & Targeting
Targeting could cover:
Progressivity of education spending (tricky to
measure)
Progressivity of tax system
Progressivity of welfare system
Andrew Leigh: Productivity, Inequality & Mobility
Andrew Leigh: Productivity, Inequality & Mobility
Sourc
e:
Whitefo
rd (
2014)
Empirical Challenges
Ideally, we want to look at changes on
changes
But changes in survey-based estimates are
rarely statistically significant.
Policy experiments are rare
Exception: Pekkarinen et al. (2006)
Andrew Leigh: Productivity, Inequality & Mobility
Empirical Challenges
Proxies for mobility are imperfect
Mobility estimates using parent/child education or
occupation are sensitive to the number of
categories (and degree of dispersion across
them)
Surname estimates may be capturing a
parameter (like race) that is different to mobility.
Andrew Leigh: Productivity, Inequality & Mobility
Five Possible Projects
1. Estimate small-area mobility in countries for which
good administrative data exists, then use to test
relationships with inequality and productivity.
2. Look at changes in extremely static systems (eg.
European feudalism, traditional Indian caste
system). How much of the productivity benefits of
the Industrial Revolution are mobility-related?
Andrew Leigh: Productivity, Inequality & Mobility
Five Possible Projects
3. Explore educational channel – what are the
features of school systems in mobile societies?
4. Explore family channel – what role does family
structure, parental time play in mobility?
5. Explore innovation channel – where does parental
wealth affect entrepreneurial success least? Are
there lessons from the banking system there?
Andrew Leigh: Productivity, Inequality & Mobility
Supplementary Material
Andrew Leigh: Productivity, Inequality & Mobility
Empirical Challenges
The very top is different
IGEs approach 0.9 at the top of the Swedish &
Canadian distributions.
Surname approach of Clark finds IGEs of 0.7-0.9
Chetty et al. (2014) find no relationship between
top 1% share & mobility.
Andrew Leigh: Productivity, Inequality & Mobility
Simple correlations can mislead
The case of inequality & infant mortality
Andrew Leigh: Productivity, Inequality & Mobility
AUS
AUT BEL
CAN
CZE
DNK
FIN
FRADEU
GRC
HUN
IRL
ITA
NLD
NOR
SVK
ESP
SWE
CHE
GBR
USA
46
810
Infa
nt M
ort
alit
y (
de
ath
s p
er
10
00
)
.2 .25 .3 .35 .4Gini Coefficient
AUS
BEL
CAN
FRA
DEU
ITA
NLD
NOR
ESP
SWE
CHE
GBR
USA
-4-3
.5-3
-2.5
-2-1
.5
Ch
an
ge
in in
fant m
ort
alit
y
-.02 0 .02 .04Change in Gini
Some
disagreemen
t on trends in
US mobility
Aaronson &
Mazumder
2008
Chetty et al.
2014
Andrew Leigh: Productivity, Inequality & Mobility
Andrew Leigh: Productivity, Inequality & Mobility