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Understanding income mobility: the role of education for intergenerational income persistence in the US, UK and Sweden

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Author Info

  • Paul Gregg

    ()
    (Department of Social and Policy Science, University of Bath)

  • Jan. O. Jonsson

    ()
    (Nuffield College, Oxford University and Swedish Institute for Social Research, Stockholm University)

  • Lindsey Macmillan

    ()
    (Department of Quantitative Social Science, Institute of Education, University of London)

  • Carina Mood

    ()
    (Institute for Future Studies, Stockholm and Swedish Institute for Social Research, Stockholm University)

Abstract

A growing number of studies in several countries over the past twenty years have documented the persistence in incomes across generations, and much of the current literature is seeking to understand the processes driving intergenerational mobility and how these differ across time periods and across countries. Education is commonly seen, just as in sociological studies of social mobility or status attainment, as the key driving force of intergenerational associations. In this paper we study the role of education for intergenerational income associations in three countries over time, and across the life-span of sons. We pay particular attention to issues of life-cycle bias and measurement error in modelling income mobility in a comparative setting. To explore the role of education, we utilise a three-stage framework that decomposes the intergenerational elasticity into three parts: the relationship between income and education, the returns to education, and the direct relationship between parental income and their child’s income in the next generation after controlling for education. We find that the US and the UK have high levels of income persistence (low mobility) across generations while Sweden is more moderate. Levels of educational inequality are surprisingly similar in all three countries with the majority of the difference between the US/UK and Sweden working through unequal returns to education and, more strikingly, inequality of opportunities for people with similar educational qualifications.

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Bibliographic Info

Paper provided by Department of Quantitative Social Science - Institute of Education, University of London in its series DoQSS Working Papers with number 13-12.

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Date of creation: 08 Oct 2013
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Handle: RePEc:qss:dqsswp:1312

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Keywords: Intergenerational mobility; children; education;

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  1. Gary S. Becker & Nigel Tomes, 1994. "Human Capital and the Rise and Fall of Families," NBER Chapters, in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 257-298 National Bureau of Economic Research, Inc.
  2. Jo Blanden & Paul Gregg & Lindsey Macmillan, 2006. "Accounting for Intergenerational Income Persistence: Non-Cognitive Skills, Ability and Education," CEE Discussion Papers 0073, Centre for the Economics of Education, LSE.
  3. Jo Blanden & Paul Gregg & Lindsey Macmillan, 2013. "Intergenerational Persistence in Income and Social Class: The Impact of Within-Group Inequality," CEP Discussion Papers dp1242, Centre for Economic Performance, LSE.
  4. Singh, S K & Maddala, G S, 1976. "A Function for Size Distribution of Incomes," Econometrica, Econometric Society, vol. 44(5), pages 963-70, September.
  5. Anders Bohlmark & Matthew J. Lindquist, 2006. "Life-Cycle Variations in the Association between Current and Lifetime Income: Replication and Extension for Sweden," Journal of Labor Economics, University of Chicago Press, vol. 24(4), pages 879-900, October.
  6. Gary Solon, 2002. "Cross-Country Differences in Intergenerational Earnings Mobility," Journal of Economic Perspectives, American Economic Association, vol. 16(3), pages 59-66, Summer.
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