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On the Importance of Finnishing School: Half a Century of Inter-generational Economic Mobility in Finland

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  • Sari Pekkala
  • Robert E.B. Lucas

Abstract

Trends in inter-generational economic mobility in Finland are analyzed using panel data from 1950 through 1999 on more than 200 thousand sons and daughters born between 1930 and 1970. A significant decline is estimated in the inter-generational transmission elasticity from the 1930 birth cohort until the baby boom cohorts of the early 1950s. After that we observe no increase in the extent of mobility for the 1950s and 1960s birth cohorts. The quite dramatic transformation of the Finnish economy in the second half of the twentieth century is outlined in the paper. A decomposition of the intergenerational transmission elasticities across cohorts shows that most of the decline in transmission reflected a reduction in the impact of family income on duration of children's education accompanied by a decline in the returns to schooling. Despite the large volume of rural - urban migration during this period of transformation, regional mobility played only a minor role in increasing economic mobility.

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Bibliographic Info

Paper provided by Government Institute for Economic Research Finland (VATT) in its series Discussion Papers with number 359.

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Date of creation: 10 Feb 2005
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Handle: RePEc:fer:dpaper:359

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Keywords: Inter-generational mobility; cohorts; education; migration;

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  1. Couch, Kenneth A. & Lillard, Dean R., 1998. "Sample selection rules and the intergenerational correlation of earnings," Labour Economics, Elsevier, vol. 5(3), pages 313-329, September.
  2. Osterbacka, Eva, 2001. " Family Background and Economic Status in Finland," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(3), pages 467-84, September.
  3. Espen Bratberg & Oivind Anti Nilsen & Kjell Vaage, 2005. "Intergenerational Earnings Mobility in Norway: Levels and Trends," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(3), pages 419-435, 09.
  4. Jo Blanden & Alissa Goodman & Paul Gregg & Stephen Machin, 2002. "Changes in Intergenerational Mobility in Britain," CEP Discussion Papers dp0517, Centre for Economic Performance, LSE.
  5. Robert E. B. Lucas & Sari A. Pekkala, . "Abilities, Budgets and Age: Inter-Generational Economic Mobility in Finland," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp130, Boston University - Department of Economics.
  6. Becker, Gary S & Tomes, Nigel, 1986. "Human Capital and the Rise and Fall of Families," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages S1-39, July.
  7. Chul-In Lee & Gary Solon, 2006. "Trends in Intergenerational Income Mobility," NBER Working Papers 12007, National Bureau of Economic Research, Inc.
  8. Ramses H. ABUL NAGA, 1998. "Estimating the Intergenerational Correlation of Incomes : An Errors in Variables Framework," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 9812, Université de Lausanne, Faculté des HEC, DEEP.
  9. Atkinson,A.B. & Rainwater,L. & Smeeding,T., 1995. "Income Distribution in European Countries," Cambridge Working Papers in Economics 9535, Faculty of Economics, University of Cambridge.
  10. Bound, John & Johnson, George, 1992. "Changes in the Structure of Wages in the 1980's: An Evaluation of Alternative Explanations," American Economic Review, American Economic Association, vol. 82(3), pages 371-92, June.
  11. Eriksson, Tor & Jantti, Markus, 1997. "The distribution of earnings in Finland 1971-1990," European Economic Review, Elsevier, vol. 41(9), pages 1763-1779, December.
  12. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June.
  13. David I. Levine & Bhashkar Mazumder, 2002. "Choosing the right parents: changes in the intergenerational transmission of inequality between 1980 and the early 1990s," Working Paper Series WP-02-08, Federal Reserve Bank of Chicago.
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Cited by:
  1. Pekkarinen, Tuomas & Uusitalo, Roope & Pekkala, Sari, 2006. "Education Policy and Intergenerational Income Mobility: Evidence from the Finnish Comprehensive School Reform," IZA Discussion Papers 2204, Institute for the Study of Labor (IZA).
  2. Jäntti, Markus & Bratsberg,Bernt & Røed, Knut & Raaum, Oddbjørn & Naylor, Robin & Österbacka, Eva & Björklund, Anders & Eriksson, Tor, 2007. "American exceptionalism in a new light : a comparison of intergenerational earnings mobility in the Nordic countries, the United Kingdom and the United States," The Warwick Economics Research Paper Series (TWERPS) 781, University of Warwick, Department of Economics.

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