Intergenerational Earnings Elasticity - How Tightly Parents' Income Binds Children
The standard metric for social mobility is Intergenerational Earnings Elasticity (IGE). An IGE of 0 indicates no correlation between parent and child income (perfect equality of opportunity), while 1 means parental income is entirely inherited (a perfectly rigid society). According to Corak (2013), Denmark's IGE is 0.15, Canada's is 0.19, Japan's is 0.34, the United States' is 0.47, and Peru's is 0.67. The United States ranks among the least socially mobile developed nations.
An IGE of 0.47 means that if a parent's income exceeds the average by $10,000, their child's income tends to exceed the average by $4,700. This "inheritance of income" transmits not through genes but through environmental factors including educational opportunity, social networks, residential location, and health status. The data confirms that the economic circumstances of one's birth family substantially determine future economic standing, independent of individual effort.
The Great Gatsby Curve - A Vicious Cycle of Inequality and Rigidity
The "Great Gatsby Curve," named by economist Alan Krueger in 2012, demonstrates a positive correlation between income inequality (Gini coefficient) and intergenerational income rigidity (IGE). Societies with greater current inequality make it harder for the next generation to change their position. This relationship, sometimes called the "inequality trap," suggests that widening gaps self-reinforce, progressively solidifying stratification.
Nordic countries occupy the "high mobility, low inequality" quadrant with low Gini coefficients (0.25-0.28) and low IGE (0.15-0.20). The United States and United Kingdom sit in the "low mobility, high inequality" quadrant with high Gini coefficients (0.35-0.40) and high IGE (0.40-0.50). Japan occupies an intermediate position, though rising Gini coefficients in recent years raise concerns about future mobility decline.
Chetty's Opportunity Atlas - Where Geography Becomes Destiny
The Opportunity Atlas project (2018) by Raj Chetty and colleagues at Harvard tracked adult earnings for children raised in every US zip code. The findings were striking: within the same city, the neighborhood where a child grows up produces annual income differences exceeding $10,000 in adulthood. These differences persist even after controlling for race, parental income, and educational attainment.
Follow-up analysis of the Moving to Opportunity experiment showed that children who relocated from low-income to high-income neighborhoods before age 13 experienced a 31% increase in adult earnings on average. The influence of residential environment on human capital formation is substantially larger than previously assumed. Similar geographic disparities likely exist in Japan, though limited individual-level income tracking data constrains empirical research.
Success Factors and Limitations of the Nordic Model
Institutional factors supporting high social mobility in Nordic countries include: (1) tuition-free higher education, (2) generous childcare support and universal provision, (3) progressive taxation and redistribution, and (4) labor market flexibility combined with robust unemployment insurance (flexicurity). These mechanisms institutionally guarantee "equality of opportunity" - designed not to equalize outcomes but to level the starting line.
The Nordic model has limitations, however. In immigrant social integration, income gaps between natives and immigrants persist even into the second generation. Additionally, high tax burdens may suppress entrepreneurial incentives, and critics note that innovation output lags behind the United States. Maximizing social mobility and maintaining economic dynamism are not necessarily compatible policy objectives.
Objectively Assessing Your "Starting Point" with MyRank
In MyRank's income category, it is important to consider not only your current income level but the "starting point" from which you arrived. The distance traveled from your parents' income bracket to your current position represents your personal social mobility. Cross-referencing with global IGE data allows rough estimation of how much your achievement reflects "environmental advantage" versus "individual effort."
As a next step, position your income in the global ranking using MyRank, then calculate the difference from your parents' estimated income level. If you have moved upward, you statistically belong to the "mobility-realized" group. More importantly, consider your impact on the next generation. Conscious decisions about educational investment, residential choice, and cultural capital transmission allow you to design positive intergenerational chains. Social mobility is also the accumulation of individual choices.