Intergenerational Mobility in Spain: Geographic Analysis and Causal Neighborhood Effects

This paper provides new evidence on intergenerational income mobility in Spain using rich administrative data linking millions of parents and children over 25 years. We find that Spain ranks in the middle-to-lower tier of intergenerational mobility: a 10 percentile point increase in parental income rank is associated with a 2.74 percentile point increase in a child's adult income rank, and the probability of rising from the bottom to the top income quintile is 10.4%. Notably, income persistence is particularly strong at the top of the distribution, exceeding levels in the United States. Our analysis also indicates a deterioration in intergenerational mobility among cohorts born in the last two decades of the twentieth century, especially those entering the labor market during the Great Recession. Methodologically, we introduce a Bayesian hierarchical modeling approach that yields more precise and robust estimates of mobility at granular geographic levels by borrowing strength across units, which is crucial for overcoming spatial data sparsity. Using these estimates, we show that variation in upward mobility in Spain exhibits a strong regional dimension alongside neighborhood-level differences. Finally, by exploiting variation in the age at which children move with their families, we document large causal effects of growing up in a better neighborhood, which explain around 60% of the observed geographic variation in upward mobility rates.