Volume 7, Issue 2 - "Intergenerational Economic Mobility around the World" edited by Gary Solon

This study uses an extraordinary Swedish data set to explore the sources of the intergenerational transmission of socioeconomic status. Merging data from administrative sources and censuses, we investigate the association between sons' and daughters' socioeconomic outcomes and those of their biological and rearing parents. Our analysis focuses on children raised in six different family circumstances: raised by both biological parents, raised by the biological mother without a stepfather, raised by the biological mother with a stepfather, raised by the biological father without a stepmother, raised by the biological father with a stepmother, and raised by two adoptive parents. Relative to the existing literature, the most remarkable feature of our data set is that it contains information on the biological parents even when they are not the rearing parents. We specify a simple additive model of pre-birth (including genetic) and post-birth influences and examine the model's ability to provide a unified account of the intergenerational associations in all six family types. Our results suggest substantial roles for both pre-birth and post-birth factors.

We present comparable evidence on intergenerational earnings mobility for Denmark, Finland, Norway, the UK and the US, with a focus on the role of gender and marital status. We confirm that earnings mobility in the Nordic countries is typically greater than in the US and in the UK, but find that, in contrast to all other groups, for married women mobility is approximately uniform across countries when estimates are based on women's own earnings. Defining offspring outcomes in terms of family earnings, on the other hand, leads to estimates of intergenerational mobility in the Nordic countries which exceed those for the US and the UK for both men and women, single and married. Unlike in the Nordic countries, we find that married women with children and with husbands from affluent backgrounds tend to exhibit reduced labor supply in the US and the UK. In these countries, it is the combination of assortative mating and labor supply responses which weakens the association between married women's own earnings and their parents' earnings.

This paper estimates 50-year trends in the intergenerational persistence of educational attainment for a sample of 42 nations around the globe. Large regional differences in educational persistence are documented, with Latin America displaying the highest intergenerational correlations, and the Nordic countries the lowest. We also demonstrate that the global average correlation between parent and child's schooling has held steady at about 0.4 for the past fifty years.

This paper examines the degree and patterns of intergenerational economic mobility in Italy. It uses data from the Bank of Italy's repeated cross-section household survey. Retrospective information on parental economic status may be exploited by applying a two-sample two-stage least squares estimation. I estimate the intergenerational income elasticity for Italy and investigate the main mobility patterns across the distribution. From an overall comparison, the evidence provided in this paper hints that Italy is in the low-mobility group among advanced societies, in the range of values found in the U.S. and the UK. The transmission of economic status appears to be particularly strong at the top of the income distribution. I investigate the role of education in the transmission of economic status in Italy and find evidence that children with the same level of formal education seem to have unequal chances in the labor market depending on family background.

This paper uses unique household survey data from Brazil and recently developed econometric techniques to estimate the transmission of lifetime earnings in Brazil and to examine effects of earnings measurement on estimates of intergenerational mobility. The level of intergenerational earnings transmission in Brazil is estimated to be among the highest observed for any country. Observations of earnings across the life-cycles of fathers and sons are used to form estimates of the transmission of lifetime earnings and to study life-cycle measurement effects on earnings transmission estimates. The use of earnings of relatively young sons, common in previous studies, is found to underestimate the true level of transmission of lifetime earnings. This paper provides two methods to obtain improved measures of lifetime earnings transmission. This paper also finds that education may be the most significant pathway by which earnings are transmitted intergenerationally.

This paper contributes to the growing number of studies on intergenerational mobility by providing a measure of earnings elasticity for Italy. The absence of an appropriate data set is overcome by adopting the two-sample two-stage least squares method. The analysis, based on the Survey of Household Income and Wealth, shows that intergenerational mobility is lower in Italy than it is in other developed countries. We also examine the reasons why the long-term labor market success of children is related to that of their fathers.

Combining four surveys conducted over a forty year period, I calculate intergenerational earnings elasticities for Australia, using predicted earnings in parents' occupations as a proxy for actual parental earnings. In the most recent survey, the elasticity of sons' wages with respect to fathers' wages is around 0.2. Comparing this estimate with earlier surveys, I find little evidence that intergenerational mobility in Australia has significantly risen or fallen over time. Applying the same methodology to United States data, I find that Australian society exhibits more intergenerational mobility than the United States. My method appears to slightly overstate the degree of intergenerational mobility; if the true intergenerational earnings elasticity in the United States is 0.4–0.6 (as recent studies have suggested), then the intergenerational earnings elasticity in Australia is probably around 0.2–0.3.

Using data on children whose parents lost their jobs during the post-communist transition of Hungary, we address the causal effect of unexpected long-term unemployment of parents on their children's educational achievement. We estimate the effect of the children's age at the time of their parents' job loss on their probability of dropping out of secondary school (an event that follows the parents' job loss by many years). The treatment is an additional year reared in a family with regularly employed parents, which can be interpreted as additional human capital investment. We provide bounding estimates to the causal effect. The estimated bounds are tight, they show a substantial effect, and the effect is significantly stronger for preschool age children than for older ones.

The aim of this paper is to analyze intergenerational earnings mobility in Britain for cohorts of sons born between 1950 and 1972. Since there are no British surveys with information on both sons’ and their fathers’ earnings covering the above period, we consider two separate samples from the British Household Panel Survey. We combine information from the two samples using the two-sample two-stage least squares estimator described by Arellano and Meghir (1992). Our main result shows that intergenerational earnings mobility was stable for the cohorts born between 1950 and 1960 and decreased statistically significantly among more recent cohorts, those born during 1961–1972.

Research on intergenerational earnings mobility in less developed economies is lacking. This paper investigates the case of Singapore, a newly-industrialized economy in Asia. Interval regressions are employed because of grouped dependent variables. Instrumental variables address problems of respondent errors and unobserved permanent income. Still, the estimated intergenerational elasticity of between 0.23 and 0.28 is probably under-estimated because the study uses a survey of young respondents who reported contemporaneous incomes of parents. Transformation of the estimates using scales in recent comparative studies indicates that intergenerational earnings mobility in Singapore may be moderately low when compared internationally. Education as a means through which parents invest in their children's future earnings appears important. There are some small independent returns from schooling. Mobility does not appear to differ by ethnicity, sex or income. These findings have important implications for equity, development and policy in Singapore, which has rising income disparity, a maturing economy, and an educational system which is increasingly privately run.