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Interpreting Trends in Intergenerational Income Mobility

Author

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  • Nybom, Martin

    () (SOFI, Stockholm University)

  • Stuhler, Jan

    () (Universidad Carlos III de Madrid)

Abstract

We examine how intergenerational income mobility responds to structural changes in a simple theoretical model of intergenerational transmission, deviating from the existing literature by explicitly analyzing the transition path between steady states. We find that mobility depends not only on current but also on past transmission mechanisms, such that changing policies, institutions or economic conditions may generate long-lasting trends. Variation in mobility levels across countries may thus be partly explained by differences in former institutions; current mobility trends may be caused by institutional changes in the past. We further find that transitions between steady states tend to be non-monotonic. Changes in the relative returns to different skills or a shift towards a less plutocratic and more meritocratic economy raise mobility initially, but also generate a negative trend over subsequent generations. Times of change thus tend to be times of high mobility, and declining mobility today may not reflect a recent deterioration of equality of opportunity but rather major improvements made in the past.

Suggested Citation

  • Nybom, Martin & Stuhler, Jan, 2013. "Interpreting Trends in Intergenerational Income Mobility," IZA Discussion Papers 7514, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp7514
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    Cited by:

    1. Jørgen Modalsli, 2016. "Multigenerational persistence. Evidence from 146 years of administrative data," Discussion Papers 850, Statistics Norway, Research Department.
    2. 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.
    3. 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.
    4. He Zhu & Tsunehiro OTSUKI, 2018. "Can Two Consecutive Generations’ Data Predict Longterm Intergenerational Transition? Evidence from China with three generations," OSIPP Discussion Paper 18E004, Osaka School of International Public Policy, Osaka University.
    5. Adermon, Adrian & Lindahl, Mikael & Palme, Mårten, 2016. "Dynastic human capital, inequality and intergenerational mobility," Working Paper Series 2016:19, IFAU - Institute for Evaluation of Labour Market and Education Policy.

    More about this item

    Keywords

    intergenerational mobility; intergenerational income elasticity; mobility trends; steady state; transition path;

    JEL classification:

    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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