Intergenerational mobility across Australia and the stability of regional estimates

Abstract

We produce the first estimates of intergenerational mobility in Australia using administrative data, covering a million individuals born between 1978 and 1982. Australia emerges as one of the more mobile advanced economies, with an intergenerational elasticity of income of 0.185 and a rank-rank slope of 0.215. This picture of mobility remains under a range of exercises designed to test traditional methodological concerns. While mobility is rapid through most of Australia, there is meaningful dispersion: the mining boom in particular appears to have lifted incomes for those raised in affected regions over the period in question. More generally, regions with higher incomes and lower unemployment rates tend to have higher expected ranks for those raised there; while regions with less segregation and higher school attendance rates have weaker intergenerational persistence in income ranks. We end by extending a generalised error-in-variables model to provide a framework for thinking about the stability of these regional mobility measures over time. In line with this model, regional rank-rank slopes steadily increase over the period we observe, while the expected ranks of children in the national income distribution fluctuate in ways that partly mirror the changing economic fortunes of Australian regions.