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Mobility Across Multiple Generations: The Iterated Regression Fallacy

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  • Stuhler, Jan

    () (Universidad Carlos III de Madrid)

Abstract

Conflicting views about the degree of long-run mobility across multiple generations persist because direct empirical evidence is scarce. Predictions are instead routinely derived by iteration of intergenerational measures, a procedure which implies high long-run mobility even when intergenerational mobility is low. However, the assumption that regression implies perpetual regression is a statistical fallacy. I examine this fallacy, its historical background, and its prevalence. I then present various simple models of intergenerational transmission to consider how the relation between intergenerational and multigenerational mobility is affected by elements of the transmission process. I discuss the role of market luck and indirect transmission; the multiplicity of skills; the role of grandparents; and the causal effect of parental income. The direction of bias depends on modeling assumptions, but elementary properties of the transmission process imply that long-run mobility will likely be lower, possibly much lower, than predictions from intergenerational evidence suggest.

Suggested Citation

  • Stuhler, Jan, 2012. "Mobility Across Multiple Generations: The Iterated Regression Fallacy," IZA Discussion Papers 7072, Institute for the Study of Labor (IZA).
    • Handle: RePEc:iza:izadps:dp7072
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    References listed on IDEAS

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    1. Goldberger, Arthur S, 1989. "Economic and Mechanical Models of Intergenerational Transmission," American Economic Review, American Economic Association, vol. 79(3), pages 504-513, June.
    2. Gary S. Becker & Nigel Tomes, 1994. "Human Capital and the Rise and Fall of Families," NBER Chapters,in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 257-298 National Bureau of Economic Research, Inc.
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    4. Friedman, Milton, 1992. "Do Old Fallacies Ever Die?," Journal of Economic Literature, American Economic Association, vol. 30(4), pages 2129-2132, December.
    5. Jeffrey S. Zax & Daniel I. Rees, 2002. "IQ, Academic Performance, Environment, and Earnings," The Review of Economics and Statistics, MIT Press, vol. 84(4), pages 600-616, November.
    6. Lindahl, Mikael & Palme, Mårten & Sandgren Massih, Sofia & Sjögren, Anna, 2012. "The intergenerational persistence of human capital: an empirical analysis of four generations," Working Paper Series 2012:12, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    7. Clark, Gregory & Cummins, Neil, 2013. "Surnames and social mobility: England 1230-2012," Economic History Working Papers 54515, London School of Economics and Political Science, Department of Economic History.
    8. Becker, Gary S & Tomes, Nigel, 1979. "An Equilibrium Theory of the Distribution of Income and Intergenerational Mobility," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1153-1189, December.
    9. Piketty, Thomas, 2000. "Theories of persistent inequality and intergenerational mobility," Handbook of Income Distribution,in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 8, pages 429-476 Elsevier.
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    Citations

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    Cited by:

    1. Adermon, Adrian & Lindahl, Mikael & Waldenström, Daniel, 2016. "Intergenerational wealth mobility and the role of inheritance: Evidence from multiple generations," CEPR Discussion Papers 11456, C.E.P.R. Discussion Papers.
    2. Kroeger, Sarah & Thompson, Owen, 2016. "Educational mobility across three generations of American women," Economics of Education Review, Elsevier, vol. 53(C), pages 72-86.
    3. Mikael Lindahl & Mårten Palme & Sofia Sandgren Massih & Anna Sjögren, 2015. "Long-Term Intergenerational Persistence of Human Capital: An Empirical Analysis of Four Generations," Journal of Human Resources, University of Wisconsin Press, vol. 50(1), pages 1-33.
    4. Nybom, Martin & Stuhler, Jan, 2014. "Interpreting Trends in Intergenerational Mobility," Working Paper Series 3/2014, Stockholm University, Swedish Institute for Social Research.
    5. Margo, Robert A., 2016. "Obama, Katrina, and the Persistence of Racial Inequality," The Journal of Economic History, Cambridge University Press, vol. 76(02), pages 301-341, June.
    6. Mikael Lindahl & Mårten Palme & Sofia Sandgren-Massih & Anna Sjögren, 2014. "A Test of the Becker-Tomes Model of Human Capital Transmission Using Microdata on Four Generations," Journal of Human Capital, University of Chicago Press, vol. 8(1), pages 80-96.
    7. Joseph Ferrie & Catherine Massey & Jonathan Rothbaum, 2016. "Do Grandparents and Great-Grandparents Matter? Multigenerational Mobility in the US, 1910-2013," NBER Working Papers 22635, National Bureau of Economic Research, Inc.
    8. Nybom, Martin & Stuhler, Jan, 2013. "Interpreting Trends in Intergenerational Income Mobility," IZA Discussion Papers 7514, Institute for the Study of Labor (IZA).
    9. Gary Solon, 2013. "Theoretical Models of Inequality Transmission across Multiple Generations," NBER Working Papers 18790, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    intergenerational mobility; multigenerational mobility; intergenerational income elasticity; regression fallacy;

    JEL classification:

    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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