Canada’s Great Gatsby Curve: study tracks reduced upward income mobility

A new study looks at the concentration of wealth in one generation and the ability of the next generation to move up the economic ladder


Not a trust fund baby? Well, too bad.

If you were born to poor parents, chances are you will up impoverished in life. But if your parents are loaded, you’re lucky. You’re likely to become rich as well.

The connection between the concentration of wealth in one generation and the ability of the next generation to move up the economic ladder is known as the Great Gatsby Curve.

A study of five cohorts of Canadians born from 1963 to 1985 proves what many would probably feel as instictively true.

“Over the span of these five cohorts, Canada has been ‘going up’ the Great Gatsby Curve, characterized by an increasing degree of income inequality among parents and a decreasing degree of income mobility among children,” the paper noted.

The study titled, Trends in Intergenerational Income Mobility and Income Inequality In Canada was authored by Marie Connolly, Catherine Haeck, and David Lapierre of Statistics Canada.

The work was released Wednesday, February 10.

The Great Gatsby Curve concept was introduced in 2012 by Alan Krueger, a leading economist during the administration of then U.S. president Barack Obama.

The measure got its name from the 1925 novel of F. Scott Fitzgerald titled The Great Gatsby. In a 2013 movie, Leonardo DiCaprio played the role of the ambitious protagonist Jay Gatsby.

The Statistics Canada study indicated that the probability that a child from the bottom 20 per cent of the parental income distribution would remain in the bottom 20 per cent later in life increased from 27.1 per cent among those born from 1963 to 1966 to 32.6 per cent among the cohort born from 1982 to 1985.

Also, the correlation between a child’s income rank as an adult and their parents’ income rank increased from 0.189 to 0.234 across cohorts.

This indicates a reduced likelihood of income mobility.

“More inequality has gone hand in hand with lower mobility,” the study observed.

To read more, click here.

This story originally appeared in the Georgia Straight. With files from NOW staff.

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