What is the Great Gatsby curve in simple terms?

A graph showing that in more unequal countries, parents' economic status passes more strongly to their children.

Why the name 'Great Gatsby'?

After the novel's hero who rose from poverty, symbolising the question of social mobility.

Great Gatsby Curve

📈 Economics By CampusDown Wiki Editorial Team Last updated October 27, 2026

The Great Gatsby curve is a graph showing that countries with higher income inequality have lower intergenerational mobility, so children of poor parents are more likely to stay poor. Alan Krueger named it in 2012, and Miles Corak's research popularised it.

Contents

1. Concept and measurement
2. Mechanisms
3. Limits of interpretation
4. FAQ
5. References

Concept and measurement

Mobility is usually measured by the intergenerational income elasticity (Solon, 1992). Corak (2013) plotted it against inequality across countries, showing an upward-sloping curve. Krueger named it after the novel The Great Gatsby. It is a core finding of intergenerational income mobility research.

Mechanisms

With high inequality, rich parents can invest far more in education and neighbourhoods, widening human capital gaps. Chetty and colleagues (2014) found lower mobility in more unequal US areas, and Durlauf and Seshadri (2018) analysed parental investment and segregation as mechanisms, linked to the Matthew effect.

Limits of interpretation

The curve is a cross-country correlation, not proof that inequality causes low mobility. Black and Devereux (2010) and Jäntti and Jenkins (2015) showed results depend on measurement, and Durlauf and colleagues (2022) urged caution on causality. Many still cite it in support of equal-opportunity policies.

FAQ

What is the Great Gatsby curve in simple terms?: A graph showing that in more unequal countries, parents' economic status passes more strongly to their children.
Why the name 'Great Gatsby'?: After the novel's hero who rose from poverty, symbolising the question of social mobility.

Sources reviewed: 2026-10-26

References

Solon, G. (1992). Intergenerational income mobility in the United States. The American Economic Review, 82(3), 393–408. Classic estimate of intergenerational elasticity.
Corak, M. (2013). Income inequality, equality of opportunity, and intergenerational mobility. Journal of Economic Perspectives, 27(3), 79–102. The key cross-country presentation of the curve.
Black, S. E., & Devereux, P. J. (2010). Recent developments in intergenerational mobility (NBER Working Paper No. 15889). National Bureau of Economic Research. Reviews methods in mobility research.
Chetty, R., Hendren, N., Kline, P., & Saez, E. (2014). Where is the land of opportunity? The geography of intergenerational mobility in the United States. The Quarterly Journal of Economics, 129(4), 1553–1623. Regional mobility and inequality in the US.
Jäntti, M., & Jenkins, S. P. (2015). Income mobility. In A. B. Atkinson & F. Bourguignon (Eds.), Handbook of income distribution (Vol. 2, pp. 807–935). Elsevier. Handbook chapter on income mobility.
Durlauf, S. N., & Seshadri, A. (2018). Understanding the Great Gatsby Curve. NBER Macroeconomics Annual, 32, 333–393. Analyses the mechanisms behind the curve.
Durlauf, S. N., Kourtellos, A., & Tan, C. M. (2022). The Great Gatsby Curve (NBER Working Paper No. 29761). National Bureau of Economic Research. A recent review of the evidence and limits.

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This article was last updated on October 27, 2026. It is based on widely recognized original works and textbooks; when citing it in a paper, please check the original sources listed in the references.