Technical change, earnings inequality, and social mobility

Given that a society’s distribution of labor earnings reflects the prevailing inequality in economic well-being within that society, it deserves further inquiry. There are two major strands in the literature that deals with the causes for and the consequences of the unequal distribution of labor earnings. On the one hand, there is the–recently burgeoning–literature in economics on the dispersion of labor earnings that can be observed at any given point in time which shall be referred to as intragenerational inequality. On the other hand, both sociologists and economists have been concerned for a long time with the persistence of inequality in earnings among members of different families, classes, castes, or income groups. The possible switching of positions in the earnings distribution is usually referred to as intergenerational social mobility. The latter literature is motivated by the belief that the assessment of inequality at a given point in time critically depends on the degree of intergenerational social mobility. Inequality appears the more socially acceptable, the higher are the chances for individuals to rise and to fall in the income ladder. This thesis contributes to the understanding of both aspects of earnings inequality–inequality in earnings both within and between families. This introductory chapter aims at giving a broad overview over the main conclusions of both lines of research and shows how the contributions of the present thesis, presented in the chapters 2-4, fit into this literature.