February 23, 2016

University of Ottawa Professor Analyzes Sources of Economic Inequality in Cornell Lecture

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Nearly 100 people attended a lecture on the variables affecting income inequality delivered by Prof. Miles Corak, economics, University of Ottawa, in Goldwin Smith Hall Monday.

Corak began the talk titled ‘Too many children left behind? Inequality, Life Chances, and Public Policy’ by introducing “three facts” related to intergenerational economic mobility and levels of income inequality.

He said “generational earnings mobility” – the measure of the extent to which one’s parents’ income determines one’s own income – varies from country to country. The United States and United Kingdom are among the highest ranked of the countries in this metric, that is, in those countries, the most inequality from generation to generation is preserved, according to Corak.

Corak also presented a graph that plotted income inequality against generational earnings mobility. Countries that are more unequal have lower levels of mobility, Corak said.

Corak stressed that income inequality has risen from 1985 to 2008 in most advanced countries. He said there are many value judgements involved when determining public policy to address economic inequality.

“Most citizens of the rich countries would agree that we don’t want to live in a society in which the allocation of jobs or access to important sources of human capital like healthcare or education… are allocated by nepotism,” he said.

Corak also stressed the importance of correct interpretation of the statistics on this topic.

“We need to be very careful in translating our statistics into equality of opportunity,” he said. “[The] correlation we saw [showing generational earnings mobility] might reflect fundamental differences in the diversity of societies. After all, Denmark is a very homogeneous society with particular policies toward immigration that probably don’t match the historical experience in the United States.”

Additionally, he pointed to the significance of family structures and investing in children.

“Families that tend to have more human capital, better health care, are more educated, tend to have the monetary and the non-monetary resources to invest in their kids,” he said. “Families with more money invest more in their children, enriching their lives outside of formal schooling.”

Corak suggested that the variation in generational earnings mobility between countries should be a public policy concern and stressing that “the family, the market, and the state” all play large roles in this disparity.

“More unequal societies will likely not experience more mobility without concerted and effective public policies,” he said.

Corak also said economics literature “does not really support” the idea that free tuition dramatically increases access to college.

Regarding immigrants’ impact on the labor market, Corak said that “there are economists that fall on two sides of the fence.”

“My sense is that immigrants don’t have that much of a downward push [on wages],” he said.