IDEAS home Printed from https://ideas.repec.org/p/hka/wpaper/2018-043.html
   My bibliography  Save this paper

The Intergenerational Elasticity of What? The Case for Redefining the Workhorse Measure of Economic Mobility

Author

Listed:
  • Pablo Mitnik

    (Stanford University)

  • David Grusky

    (Stanford University)

Abstract

The intergenerational elasticity (IGE) has been assumed to refer to the expectation of children's income when in fact it pertains to the geometric mean of children's income. We show that mobility analyses based on the conventional IGE have been widely misinterpreted, are subject to selection bias, and cannot disentangle the “channels†underlying intergenerational persistence. The solution to these problems — estimating the IGE of expected income or earnings — returns the field to what it has long meant to estimate. Under this approach, persistence is found to be substantially higher, thus raising the possibility that the field's stock results are misleading.

Suggested Citation

  • Pablo Mitnik & David Grusky, 2018. "The Intergenerational Elasticity of What? The Case for Redefining the Workhorse Measure of Economic Mobility," Working Papers 2018-043, Human Capital and Economic Opportunity Working Group.
    • Handle: RePEc:hka:wpaper:2018-043
    Note: MIP
    as

    Download full text from publisher

    File URL: http://humcap.uchicago.edu/RePEc/hka/wpaper/Mitnik_Grusky_2018_intergen-elasticity-of-what-r.pdf
    File Function: First version, September, 2017
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. 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.
    2. Bhashkar Mazumder, 2005. "Fortunate Sons: New Estimates of Intergenerational Mobility in the United States Using Social Security Earnings Data," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 235-255, May.
    3. Steven Haider & Gary Solon, 2006. "Life-Cycle Variation in the Association between Current and Lifetime Earnings," American Economic Review, American Economic Association, vol. 96(4), pages 1308-1320, September.
    4. Pablo Mitnik, 2018. "Intergenerational Income Elasticities, Instrumental Variable Estimation, and Bracketing Strategies," Working Papers 2018-044, Human Capital and Economic Opportunity Working Group.
    5. Guido W. Imbens & Charles F. Manski, 2004. "Confidence Intervals for Partially Identified Parameters," Econometrica, Econometric Society, vol. 72(6), pages 1845-1857, November.
    6. Miles Corak, 2013. "Income Inequality, Equality of Opportunity, and Intergenerational Mobility," Journal of Economic Perspectives, American Economic Association, vol. 27(3), pages 79-102, Summer.
    7. Murray D. Smith, 2003. "Modelling sample selection using Archimedean copulas," Econometrics Journal, Royal Economic Society, vol. 6(1), pages 99-123, June.
    8. Paul Gregg & Lindsey Macmillan & Claudia Vittori, 2017. "Moving Towards Estimating Sons' Lifetime Intergenerational Economic Mobility in the UK," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 79(1), pages 79-100, February.
    9. Miles Corak, 2006. "Do Poor Children Become Poor Adults? Lessons from a Cross-Country Comparison of Generational Earnings Mobility," Research on Economic Inequality, in: Dynamics of Inequality and Poverty, pages 143-188, Emerald Group Publishing Limited.
    10. Francis Vella, 1998. "Estimating Models with Sample Selection Bias: A Survey," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 127-169.
    11. Hasebe, Takuya & Vijverberg, Wim P., 2012. "A Flexible Sample Selection Model: A GTL-Copula Approach," IZA Discussion Papers 7003, Institute of Labor Economics (IZA).
    12. Pablo Mitnik, 2018. "Estimating the Intergenerational Elasticity of Expected Income with Short-Run Income Measures: A Generalized Error-in-Variables Model," Working Papers 2018-045, Human Capital and Economic Opportunity Working Group.
    13. Alexandra L. Minicozzi, 2003. "Estimation of sons' intergenerational earnings mobility in the presence of censoring," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(3), pages 291-314.
    14. Raj Chetty & Nathaniel Hendren & Patrick Kline & Emmanuel Saez, 2014. "Where is the land of Opportunity? The Geography of Intergenerational Mobility in the United States," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(4), pages 1553-1623.
    15. Windmeijer, F A G & Silva, J M C Santos, 1997. "Endogeneity in Count Data Models: An Application to Demand for Health Care," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 12(3), pages 281-294, May-June.
    16. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
    17. Moffitt, Robert A., 1999. "New developments in econometric methods for labor market analysis," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 24, pages 1367-1397, Elsevier.
    18. Chul-In Lee & Gary Solon, 2009. "Trends in Intergenerational Income Mobility," The Review of Economics and Statistics, MIT Press, vol. 91(4), pages 766-772, November.
    19. repec:bla:revinw:v:36:y:1990:i:2:p:115-27 is not listed on IDEAS
    20. Corak,Miles (ed.), 2004. "Generational Income Mobility in North America and Europe," Cambridge Books, Cambridge University Press, number 9780521827607, January.
    21. Stuhler, Jan, 2012. "Mobility Across Multiple Generations: The Iterated Regression Fallacy," IZA Discussion Papers 7072, Institute of Labor Economics (IZA).
    22. John Mullahy, 1997. "Instrumental-Variable Estimation Of Count Data Models: Applications To Models Of Cigarette Smoking Behavior," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 586-593, November.
    23. Zimmerman, David J, 1992. "Regression toward Mediocrity in Economic Stature," American Economic Review, American Economic Association, vol. 82(3), pages 409-429, June.
    24. Levine, David I., 1999. "Choosing the Right Parents: Changes in the Intergenerational Transmission of Inequality Between the 1970s and the early 1990s," Institute for Research on Labor and Employment, Working Paper Series qt9r45b10r, Institute of Industrial Relations, UC Berkeley.
    25. Ng Irene, 2007. "Intergenerational Income Mobility in Singapore," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(2), pages 1-35, October.
    26. Levine, David I., 1999. "Choosing the Right Parents: Changes in the Intergenerational Transmission of Inequality Between the 1970s and the early 1990s," Institute for Research on Labor and Employment, Working Paper Series qt9r45b10r, Institute of Industrial Relations, UC Berkeley.
    27. Jere R. Behrman & Paul Taubman, 1990. "The Intergenerational Correlation Between Children'S Adult Earnings And Their Parents' Income: Results From The Michigan Panel Survey Of Income Dynamics," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 36(2), pages 115-127, June.
    28. Dunn Christopher E, 2007. "The Intergenerational Transmission of Lifetime Earnings: Evidence from Brazil," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(2), pages 1-42, October.
    29. Javier Núñez & Leslie Miranda, 2011. "Intergenerational income and educational mobility in urban Chile," Estudios de Economia, University of Chile, Department of Economics, vol. 38(1 Year 20), pages 195-221, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pablo Mitnik, 2018. "Estimating the Intergenerational Elasticity of Expected Income with Short-Run Income Measures: A Generalized Error-in-Variables Model," Working Papers 2018-045, Human Capital and Economic Opportunity Working Group.
    2. J. M. C. Santos Silva & Silvana Tenreyro, 2022. "The Log of Gravity at 15," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 21(3), pages 423-437, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pablo Mitnik, 2018. "Intergenerational Income Elasticities, Instrumental Variable Estimation, and Bracketing Strategies," Working Papers 2018-044, Human Capital and Economic Opportunity Working Group.
    2. Markus Jäntti & Stephen P. Jenkins, 2013. "Income Mobility," SOEPpapers on Multidisciplinary Panel Data Research 607, DIW Berlin, The German Socio-Economic Panel (SOEP).
    3. Anna Christina D'Addio, 2007. "Intergenerational Transmission of Disadvantage: Mobility or Immobility Across Generations?," OECD Social, Employment and Migration Working Papers 52, OECD Publishing.
    4. Robert Lucas & Sari Kerr, 2013. "Intergenerational income immobility in Finland: contrasting roles for parental earnings and family income," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(3), pages 1057-1094, July.
    5. Florencia Torche, 2015. "Analyses of Intergenerational Mobility," The ANNALS of the American Academy of Political and Social Science, , vol. 657(1), pages 37-62, January.
    6. Pablo Mitnik, 2018. "Estimating the Intergenerational Elasticity of Expected Income with Short-Run Income Measures: A Generalized Error-in-Variables Model," Working Papers 2018-045, Human Capital and Economic Opportunity Working Group.
    7. Daniel D. Schnitzlein, 2016. "A New Look at Intergenerational Mobility in Germany Compared to the U.S," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(4), pages 650-667, December.
    8. Bhashkar Mazumder, 2018. "Intergenerational Mobility in the United States: What We Have Learned from the PSID," The ANNALS of the American Academy of Political and Social Science, , vol. 680(1), pages 213-234, November.
    9. Chris Belfield & Claire Crawford & Ellen Greaves & Paul Gregg & Lindsey Macmillan, 2017. "Intergenerational income persistence within families," IFS Working Papers W17/11, Institute for Fiscal Studies.
    10. Ng, Irene Y.H. & Shen, Xiaoyi & Ho, Kong Weng, 2009. "Intergenerational earnings mobility in Singapore and the United States," Journal of Asian Economics, Elsevier, vol. 20(2), pages 110-119, March.
    11. Jonathan Davis & Bhashkar Mazumder, 2017. "The Decline in Intergenerational Mobility After 1980," Working Paper Series WP-2017-5, Federal Reserve Bank of Chicago, revised 14 Jan 2022.
    12. Doan, Quang Hung & Nguyen, Ngoc Anh, 2016. "Intergenerational Income Mobility in Vietnam," MPRA Paper 70603, University Library of Munich, Germany.
    13. Francesco Bloise & Michele Raitano, 2019. "Intergenerational earnings elasticity of actual father-son pairs in Italy accounting for lifecycle and attenuation bias," Working Papers 504, ECINEQ, Society for the Study of Economic Inequality.
    14. Bertha Rohenkohl, 2019. "Intergenerational Income Mobility in the UK:New evidence using the BHPS and Understanding Society," Working Papers 2019017, The University of Sheffield, Department of Economics.
    15. Francesco Bloise & Michele Raitano, 2021. "Intergenerational Earnings Persistence in Italy between Actual Father–Son Pairs Accounting for Lifecycle and Attenuation Bias," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 83(1), pages 88-114, February.
    16. Coban, Mustafa & Sauerhammer, Sarah, 2017. "Transmission channels of intergenerational income mobility: Empirical evidence from Germany and the Unites States," Discussion Paper Series 138, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    17. Nancy A. Daza Báez, 2021. "Intergenerational Earnings Mobility in Mexico," DoQSS Working Papers 21-10, Quantitative Social Science - UCL Social Research Institute, University College London.
    18. Ueda Atsuko, 2009. "Intergenerational Mobility of Earnings and Income in Japan," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 1-27, December.
    19. Chenhong Peng & Paul Siu Fai Yip & Yik Wa Law, 2019. "Intergenerational Earnings Mobility and Returns to Education in Hong Kong: A Developed Society with High Economic Inequality," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 143(1), pages 133-156, May.
    20. Arnaud Lefranc, 2018. "Intergenerational earnings persistence and economic inequality in the long-run : Evidence from French cohorts, 1931-1975," Post-Print hal-02528217, HAL.

    More about this item

    Keywords

    intergenerational elasticity; geometric mean; IGE;
    All these keywords.

    JEL classification:

    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hka:wpaper:2018-043. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jennifer Pachon (email available below). General contact details of provider: https://edirc.repec.org/data/mfichus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.