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Estimating intergenerational income mobility on sub-optimal data: a machine learning approach

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  • Francesco Bloise

    (University of Roma Tre)

  • Paolo Brunori

    (London School of Economics)

  • Patrizio Piraino

    (University of Notre Dame)

Abstract

Much of the global evidence on intergenerational income mobility is based on sub-optimal data. In particular, two-stage techniques are widely used to impute parental incomes for analyses of lower-income countries and for estimating long-run trends across multiple generations and historical periods. We propose applying machine learning methods to improve the reliability and comparability of such estimates. Supervised learning algorithms minimize the out-of-sample prediction error in the parental income imputation and provide an objective criterion for choosing across different specifications of the first-stage equation. We use our approach on data from the United States and South Africa to show that under common conditions it can limit the bias generally associated to mobility estimates based on imputed parental income.

Suggested Citation

  • Francesco Bloise & Paolo Brunori & Patrizio Piraino, 2021. "Estimating intergenerational income mobility on sub-optimal data: a machine learning approach," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 19(4), pages 643-665, December.
  • Handle: RePEc:spr:joecin:v:19:y:2021:i:4:d:10.1007_s10888-021-09495-6
    DOI: 10.1007/s10888-021-09495-6
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    Cited by:

    1. Matías Ciaschi & Mariana Marchionni & Guido Neidhöfer, 2021. "Intergenerational mobility in Latin America: the multiple facets of social status and the role of mothers," Asociación Argentina de Economía Política: Working Papers 4453, Asociación Argentina de Economía Política.
    2. Brunori, Paolo & Ferreira, Francisco H. G. & Neidhöfer, Guido, 2023. "Inequality of opportunity and intergenerational persistence in Latin America," LSE Research Online Documents on Economics 120555, London School of Economics and Political Science, LSE Library.
    3. Javier Cortes Orihuela & Juan D. Díaz & Pablo Gutiérrez Cubillos & Pablo A. Troncoso, 2024. "Everything’s not lost: revisiting TSTSLS estimates of intergenerational mobility in developing countries," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(1), pages 66-94, February.

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    More about this item

    Keywords

    Intergenerational income mobility; Machine learning; Two-sample two-stage least squares;
    All these keywords.

    JEL classification:

    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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