Intergenerational mobility and the process of development

This paper offers an explanation for some evidence that intergenerational e arnings mobility is higher in more developed economies and that mobility is positively correlated with wage equality. In the model mobility promotes e conomic growth via its effect on the accumulation and allocation of human c apital. Growth influences mobility via its effect on incentives to acquire education and its effect on liquidity constraints upon such acquisition. In the process of development mobility increases and the distribution of educ ation becomes better correlated with ability. Redistributive policy has a n egative effect on growth in developed economies and a positive effect in de veloping economies.