Welfare Regimes and Intergenerational Social Mobility: An Institutional Explanation of the Great Gatsby Curve

Evidence shows that economic advantages and disadvantages tend to be hereditary, generating a positive association between income inequality and intergenerational immobility. This relationship, “the Great Gatsby Curve,” is explained in this article in relation to welfare regimes. Compared to Liberal and Nordic welfare regimes, Conservative welfare regime generates the highest level of intergenerational immobility. Multilevel analysis of data from International Social Survey Programme (ISSP2009) supports that Conservative regime is the strongest to keep the influence of parental backgrounds on children’s wealth which is the key to determine children’s socio-economic status. These findings, combined with the fact that the conservative welfare regime generates a medium-high level of economic inequality, explains why income inequality is positively and concavely correlated with intergenerational immobility.