Intergenerational Income Persistence in the Millennial Generation

This paper provides new evidence on intergenerational income persistence for a recent UK cohort. Using Next Steps, a longitudinal study of people born in England in 1989-90 linked to administrative education records, we estimate the association between parental income in adolescence and sons' earnings at age 32, compare the results with the 1970 British Cohort Study, and decompose persistence by early cognitive skills, noncognitive traits and educational attainment. Our preferred estimates show an intergenerational income elasticity of 0.214 and a rank-rank coefficient of 0.287. The rank-rank estimate is almost identical to the comparable estimate for the 1970 cohort, suggesting little change in relative income persistence across cohorts, although age-32 elasticities are likely to understate lifetime persistence. Education is the main observed mechanism: GCSE attainment, A-level attainment and degree completion account for a substantial share of persistence, while measured noncognitive traits explain little once education is included. The findings show that, despite educational expansion, family-income gradients in attainment remain central to the intergenerational transmission of economic advantage.