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Nonlinearities in Intergenerational Earnings Mobility: Consequences for Cross-Country Comparisons

Author

Listed:
  • Bernt Bratsberg
  • Knut Røed
  • Oddbjørn Raaum
  • Robin Naylor
  • Markus Ja¨ntti
  • Tor Eriksson
  • Eva O¨sterbacka

Abstract

We show that the patterns of intergenerational earnings mobility in Denmark, Finland and Norway, unlike those for the US and the UK, are highly nonlinear. The Nordic relationship between log earnings of sons and fathers is flat in the lower segments of the fathers' earnings distribution - sons growing up in the poorest households have the same adult earnings prospects as sons in moderately poor households - and is increasingly positive in middle and upper segments. This convex pattern contrasts sharply with our findings for the US and the UK, where the relationship is much closer to being linear. As a result, cross-country comparisons of intergenerational earnings elasticities may be misleading with respect to transmission mechanisms in the central parts of the earnings distribution and uninformative in the tails of the distribution. Copyright 2007 The Author(s). Journal compilation Royal Economic Society 2007.

Suggested Citation

  • Bernt Bratsberg & Knut Røed & Oddbjørn Raaum & Robin Naylor & Markus Ja¨ntti & Tor Eriksson & Eva O¨sterbacka, 2007. "Nonlinearities in Intergenerational Earnings Mobility: Consequences for Cross-Country Comparisons," Economic Journal, Royal Economic Society, vol. 117(519), pages 72-92, March.
    • Handle: RePEc:ecj:econjl:v:117:y:2007:i:519:p:c72-c92
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    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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