Intergenerational mobility and sample selection in short panels

Using data from the first 11 waves of the BHPS, this paper measures the extent of the selection bias induced by standard coresidence conditions—bias that is expected to be severe in short panels—on measures of intergenerational mobility in occupational prestige. We try to limit the impact of other selection biases, such as those induced by labour market restrictions that are typically imposed in intergenerational mobility studies, by using different measures of socio‐economic status that account for missing labour market information. We stress four main results. First, there is evidence of an underestimation of the true intergenerational elasticity, the extent of which ranges between 12% and 39%. Second, the proposed methods used to correct for the selection bias seem to be unable to attenuate it, except for the propensity score weighting procedure, which performs well in most circumstances. This result is confirmed both under the assumption of missing‐at‐random data as well as under the assumption of not‐missing‐at‐random data. Third, the two previous sets of results (direction and extent of the bias, and differential abilities to correct for it) are also robust when we account for measurement error. Fourth, restricting the sample to a period shorter than the 11 waves under analysis leads to a severe sample selection bias. In the cases when the analysis is limited to eight waves, this bias ranges from about 40% to 65%. Copyright © 2006 John Wiley & Sons, Ltd.