Measuring the link between intergenerational occupational mobility and earnings: Evidence from eight EU countries

This paper investigates the relationship between family background and earnings using relative social mobility to decompose residual background correlations, namely the effect of background on earnings left after controlling for background-related intervening factors. Using the European Union Statistics on Income and Living Conditions for 8 countries, we first show that country differences in terms of intergenerational inequality concern residual background correlations and then decompose these correlations using changes in relative social positions. In immobile countries, we find that significant residual correlations are mainly driven by penalisation of upward mobility in the UK (glass ceiling) and by an insurance against downward mobility in Spain and Italy (parachute). In mobile countries, insignificant residual correlations mask heterogeneous returns to social mobility. While our findings for Southern countries hardly concur with human capital theory, the widespread emergence of glass ceiling effects appears to be consistent with this theory.