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Reassessing Intergenerational Mobility in Germany and the United States: The Impact of Differences in Lifecycle Earnings Patterns

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  • Thorsten Vogel

Abstract

Using longitudinal data on fathers and their children, this study compares the extent of intergenerational mobility in Germany and the United States and introduces an estimation strategy that corrects estimates of intergenerational earnings elasticities for a possible lifecycle bias. In contrast to previous studies, we find that the extent of intergenerational mobility is more limited in the US than in Germany. Furthermore, while the errors-in-variables problems have been dealt with extensively in the literature, the inconsistencies in standard mobility measures due to lifecycle effects have attracted much less attention. The present paper proposes an estimation method that corrects for such inconsistencies. The extent of this lifecycle bias is found to be strong in Germany but only modest in the US.

Suggested Citation

  • Thorsten Vogel, 2006. "Reassessing Intergenerational Mobility in Germany and the United States: The Impact of Differences in Lifecycle Earnings Patterns," SFB 649 Discussion Papers SFB649DP2006-055, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    • Handle: RePEc:hum:wpaper:sfb649dp2006-055
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    Cited by:

    1. Bodo Knoll & Nadine Riedel & Eva Schlenker, 2017. "He's a Chip Off the Old Block — The Persistence of Occupational Choices Across Generations," LABOUR, CEIS, vol. 31(2), pages 174-203, June.
    2. Matthias Schnetzer & Wilfried Altzinger, 2011. "From rags to riches? Intergenerational transmission of income in Europe," Department of Economics Working Papers wuwp135, Vienna University of Economics and Business, Department of Economics.
    3. Schnitzlein, Daniel D., 2014. "How Important Is the Family? Evidence from Sibling Correlations in Permanent Earnings in the USA, Germany, and Denmark," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 69-89.
    4. Black, Sandra E. & Devereux, Paul J., 2011. "Recent Developments in Intergenerational Mobility," Handbook of Labor Economics, Elsevier.
    5. Blanden, Jo, 2009. "How much can we learn from international comparisons of intergenerational mobility?," LSE Research Online Documents on Economics 28283, London School of Economics and Political Science, LSE Library.
    6. Daniel D. Schnitzlein, 2014. "A New Look at Intergenerational Mobility in Germany Compared to the US," SOEPpapers on Multidisciplinary Panel Data Research 689, DIW Berlin, The German Socio-Economic Panel (SOEP).
    7. repec:iab:iabzaf:v:41:i:2/3:p:119-137 is not listed on IDEAS
    8. Anger, Silke, 2011. "The Intergenerational Transmission of Cognitive and Non-Cognitive Skills During Adolescence and Young Adulthood," IZA Discussion Papers 5749, Institute for the Study of Labor (IZA).
    9. Céline Lecavelier des Etangs-Levallois, 2017. "Overview of intergenerational earnings mobility in Germany," THEMA Working Papers 2017-11, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    10. 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.
    11. Schnitzlein, Daniel, 2008. "Verbunden über Generationen: Struktur und Ausmaß der intergenerationalen Einkommensmobilität in Deutschland (Structure and extent of intergenerational income mobility in Germany)," IAB Discussion Paper 200801, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    12. Pfeiffer, Friedhelm & Eisenhauer, Philipp, 2008. "Assessing Intergenerational Earnings Persistence Among German Workers," ZEW Discussion Papers 08-014, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    13. Quheng Deng & Björn Gustafsson & Shi Li, 2013. "Intergenerational Income Persistence in Urban China," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 59(3), pages 416-436, September.
    14. Eisenhauer, Philipp & Pfeiffer, Friedhelm, 2008. "Assessing intergenerational earnings persistence among German workers," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 41(2/3), pages 119-137.
    15. Martin Nybom & Jan Stuhler, 2016. "Heterogeneous Income Profiles and Lifecycle Bias in Intergenerational Mobility Estimation," Journal of Human Resources, University of Wisconsin Press, vol. 51(1), pages 239-268.
    16. Maribel Jiménez, 2011. "Un Análisis Empírico de las No Linealidades en la Movilidad Intergeneracional del Ingreso. El caso de la Argentina," CEDLAS, Working Papers 0114, CEDLAS, Universidad Nacional de La Plata.
    17. Maribel Jimenez & Monica Jimenez, 2009. "La Movilidad Intergeneracional del Ingreso: Evidencia para Argentina," CEDLAS, Working Papers 0084, CEDLAS, Universidad Nacional de La Plata.
    18. repec:bla:revinw:v:62:y:2016:i:4:p:650-667 is not listed on IDEAS
    19. Schnitzlein Daniel, 2009. "Struktur und Ausmaß der intergenerationalen Einkommensmobilität in Deutschland / Structure and Extent of Intergenerational Income Mobility in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 229(4), pages 450-466, August.
    20. Daniel D. Schnitzlein, 2008. "Verbunden über Generationen: Struktur und Ausmaß der intergenerationalen Einkommensmobilität in Deutschland," SOEPpapers on Multidisciplinary Panel Data Research 80, DIW Berlin, The German Socio-Economic Panel (SOEP).
    21. Maribel Jiménez, 2016. "Movilidad Intergeneracional del Ingreso en Argentina. Un Análisis de sus Cambios Temporales desde el Enfoque de Igualdad de Oportunidades," CEDLAS, Working Papers 0203, CEDLAS, Universidad Nacional de La Plata.
    22. Anna Christina D'Addio, 2007. "Intergenerational Transmission of Disadvantage: Mobility or Immobility Across Generations?," OECD Social, Employment and Migration Working Papers 52, OECD Publishing.
    23. Murray, Chelsea & Clark, Robert & Mendolia, Silvia & Siminski, Peter, 2017. "Direct Measures of Intergenerational Income Mobility for Australia," IZA Discussion Papers 11020, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    Intergenerational mobility; lifecycle bias; comparison of Germany and the US;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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