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Intergenerational Persistence in Income and Social Class: The Impact of Within-Group Inequality

  • Blanden, Jo

    ()

    (University of Surrey)

  • Gregg, Paul

    ()

    (University of Bath)

  • Macmillan, Lindsey

    ()

    (Institute of Education, University of London)

Family income is found to be more closely related to sons' earnings for a cohort born in 1970 compared to one born in 1958. This result is in stark contrast to the finding on the basis of social class; intergenerational mobility for this outcome is found to be unchanged. Our aim here is to explore the reason for this divergence. We derive a formal framework which relates mobility in measured family income/earnings to mobility in social class. Building on this framework we then test a number of alternative hypotheses to explain the difference between the trends, finding evidence of an increase in the intergenerational persistence of the permanent component of income that is unrelated to social class. We reject the hypothesis that the observed decline in income mobility is a consequence of the poor measurement of permanent family income in the 1958 cohort.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6202.

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Length: 59 pages
Date of creation: Dec 2011
Date of revision:
Publication status: published in: Journal of the Royal Statistical Society, Series A (Statistics in Society), 2013, 176 (2), 541–563
Handle: RePEc:iza:izadps:dp6202
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  1. Black, Sandra E. & Devereux, Paul J., 2011. "Recent Developments in Intergenerational Mobility," Handbook of Labor Economics, Elsevier.
  2. Jo Blanden & Paul Gregg & Lindsey MacMillan, 2007. "Accounting for Intergenerational Income Persistence: Noncognitive Skills, Ability and Education," School of Economics Discussion Papers 0307, School of Economics, University of Surrey.
  3. Jo Blanden & Paul Gregg, 2004. "Family Income and Educational Attainment: A Review of Approaches and Evidence for Britain," The Centre for Market and Public Organisation 04/101, Department of Economics, University of Bristol, UK.
  4. 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.
  5. Peter Gottschalk & Minh Huynh, 2006. "Are Earnings Inequality and Mobility Overstated? The Impact of Non-Classical Measurement Error," Boston College Working Papers in Economics 649, Boston College Department of Economics.
  6. Anders Björklund & Markus Jäntti, 2000. "Intergenerational mobility of socio-economic status in comparative perspective," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 26, pages 3-32.
  7. McIntosh, James & Munk, Martin D., 2009. "Social class, family background, and intergenerational mobility," European Economic Review, Elsevier, vol. 53(1), pages 107-117, January.
  8. Solon, Gary, 1992. "Intergenerational Income Mobility in the United States," American Economic Review, American Economic Association, vol. 82(3), pages 393-408, June.
  9. Philip Oreopoulos & Marianne Page & Ann Huff Stevens, 2008. "The Intergenerational Effects of Worker Displacement," Journal of Labor Economics, University of Chicago Press, vol. 26(3), pages 455-483, 07.
  10. Nathan D . Grawe, 2004. "The 3-day Week of 1974 and Earnings Data Reliability in the Family Expenditure Survey and the National Child Development Study," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 66(4), pages 567-579, 09.
  11. repec:cup:cbooks:9780521827607 is not listed on IDEAS
  12. Dickens, Richard, 2000. "The Evolution of Individual Male Earnings in Great Britain: 1975-95," Economic Journal, Royal Economic Society, vol. 110(460), pages 27-49, January.
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