“…income inequality and intergenerational mobility are correlated across countries but do not necessarily move together within a country…. we analyze the evidence on the mechanisms that could potentially link the intergenerational transmission of income and inequality of opportunity. In order to do this, we need to understand the links between parental and children’s outcomes.” Perez-Arce et al (2016)

Skills matter. In developed countries, inequality of income is driven largely by a wage disparity between the highly skilled and the less skilled. Social mobility is stymied by lack of skills.  Why don't some people acquire the skills they need to move up the economic ladder? Why are some people stuck?

For the sake of this discussion, I'm going to call having economically valuable skills "human capital". Human capital doesn't spring forth fully formed in adults. Human capital is an outcome of processes that begin before birth. So, what keeps the human capital ball rolling and on track?  Three factors stand out:

Good health (from the womb and beyond)

Early and ongoing nurturing of cognitive skills, emotional health, and other areas of functioning conducive to learning.

Minimal exposure to adverse children experiences, such as hunger, violence and unstable living arrangements.

If families can't provide these basic building blocks of human capital, their children will likely fall behind more fortunate peers, first in school and later in the job market. If income inequality means lower-income households have trouble providing for the development of their children's human capital, then it is reasonable to say that income inequality reduces intergenerational social mobility. 

But the causal links between income inequality and social mobility can be broken with the right policies. So says the ever-optimistic policy wonk. How? Stay tuned.

References:

Perez-Arce, F., E. F. L. Amaral, H. Huang, and C. C. Price. 2016. Inequality and Opportunity: The Relationship between Income Inequality and Intergenerational Transmission of Income. Santa Monica, CA: RAND. http://www.jstor.org/stable/10.7249/j.ctt1d41dcd