Exploration of the Role of Education in Intergenerational Income Mobility in Canada: Evidence from the Longitudinal and International Study of Adults

Abstract

Canadian children experience a high level of intergenerational income mobility compared with US children. Moreover, their physical and mental health outcomes, school readiness, and post-secondary attendance are all less tightly associated with parental outcomes than in the United States. In this article, we investigate the role played by children’s education in the intergenerational transmission of income in Canada. Existing research has produced macro-level estimates of mobility to draw comparisons over time and across places and has studied the micro-level mechanisms that underlie the relationship between parents’ and children’s outcomes. However, evidence on the extent to which the different factors investigated drive the broader numbers is still limited. To remedy this, we exploit the Longitudinal and International Study of Adults, a rich panel of integrated survey and administrative data covering 1982–2013. We estimate that the education level of children accounts for 40.5–50.1 percent of the correlation between their income and their parents’, similar to the United States. Moreover, we discuss evidence suggesting that the greater mobility of Canadian children is linked not only to their lower returns to education but also to the weaker association between their education and their parents’ income. Finally, we find that almost half of the effect linked to education is associated with the skills respondents use at work, such as reading or communication.