The role of imputed rents in intergenerational income mobility in three countries

Abstract

This is the first paper that studies the effects of including non-monetary income from housing (imputed rent) in the measure of income on intergenerational income mobility. Using national panel data sets for Australia, the United States and Germany, it is shown that only Australian society becomes 22% less mobile as measured by an intergenerational rank correlation. This decrease is also confirmed using the intergenerational transition matrices. As a result, cross-regional comparisons of intergenerational income mobility may be misleading, especially using tax data as imputed rent is rarely taxed.