Intergenerational Earnings Mobility Research Articles

Intergenerational mobility of earnings in rural China

ABSTRACT Due to dataset limitations, the results from previous studies on intergenerational income mobility in rural China are inconsistent. Using panel data from the Chinese Health and Nutrition Survey, this study develops a modified version of the model by Zimmerman [Zimmerman DJ (1992) Regression towards mediocrity in economic stature. Am Econ Rev 82(3):409–429] and estimates the intergenerational earnings mobility in rural China. The new estimate demonstrates that intergenerational earnings elasticity is likely greater than 0.5, suggesting a relatively low rate of intergenerational mobility.

Intergenerational earnings mobility in Ghana

Intergenerational earnings mobility in Ghana

Breaking the Links: Natural Resource Booms and Intergenerational Mobility

Abstract The paper demonstrates that a large economic sock such as an oil boom increases intergenerational earnings mobility among directly affected men, mostly through increased bottom-up mobility, but not for women. Preexisting local differences in mobility or shifts in the earnings distributions do not drive these findings. Instead, changes in relative earnings paid to workers with different skills offer the best explanation. Moreover, we document that intergenerational mobility is significantly higher for the indirectly affected thirdgeneration and that the oil boom broke the earnings link between first- and third-generation men.

Intergenerational earnings mobility and demographic dynamics: Welfare analysis of an aging Japan

This paper simulates the effects of intergenerational earnings mobility on individual welfare and future demography in an aging and depopulating Japan. A simulation analysis finds that increased intergenerational mobility across income classes promotes economic growth, and from a long-term perspective, a higher mobility potentially achieves Pareto improvements. In the long run, however, it will hinder economic growth. This is because increased mobility increases the population share of individuals with a higher labor productivity, enhancing economic growth in the initial stage, but because of their lower fertility, an increase in their population ratio negatively effects the total population over time.

Intergenerational Earnings Mobility in Chile’s Formal Private Sector: The Tale of the Upper Tail

Intergenerational Earnings Mobility in Chile’s Formal Private Sector: The Tale of the Upper Tail

Efficiency and equity – The Swedish economy in comparison to other countries at the beginning of the 21st century

Abstract Referring to economic ideals of efficiency and equity, we are comparing the state of the Swedish economy in the early 21st century to the situation in other countries, especially the other Nordic countries, the United States (US), and Poland. After presenting the basic facts about Nordic countries we examine the issue of economic efficiency. In addition to gross domestic product (GDP) we use the Human Development Index (HDI), the findings of the economics of happiness, and the number of registered triadic patent families as measures of efficiency. Then we analyze the issue of equity. We use the Gini coefficient, the extent of poverty, the level of unemployment, and the level of intergenerational mobility of earnings as measures of equity. The analysis reveals that inhabitants of Sweden and the other Nordic countries have been achieving some of the best economic results in the world. This applies to the level of GDP per capita in these countries, to the capability of inhabitants to utilize their full potential, and to their life satisfaction. These countries’ ability to create innovation is impressive. At the same time, Nordics have successfully reduced the scale of social inequalities and ensured relatively equal opportunities for all citizens. This is evidenced by low income inequality, low unemployment, and low poverty rate in these countries. Sweden and the other Nordic countries are superior to the US both in terms of efficiency and equity. Poland, on the other hand, lags far behind Nordics, as well as the US, in terms of efficiency, as exemplified by the relatively low GDP per capita and very low innovation in Poland. In terms of equity, however, Poland loses to Nordics but seems to win to the US.

Intergenerational Earnings and Income Mobility in Vietnam

AbstractThis paper empirically examines the intergenerational mobility of earnings and income in Vietnam using the two‐sample two‐stage least squares estimation. The baseline intergenerational elasticity estimates show that Vietnam occupies the intermediate degrees of intergenerational mobility of earnings and income for both sons and daughters. In particular, a rise of 10 per cent in fathers’ earnings is on average associated with an increase of 3.61 per cent and 3.94 per cent for sons’ earnings and income, respectively. The corresponding figures for daughters’ earnings and income are 2.84 per cent and 3.33 per cent, respectively.

Intergenerational Earnings Mobility in Post‐Soviet Russia

We make use of longitudinal data for the Russian economy over 1994–2016 to obtain earnings information about parents and children. We show that rank correlations give reliable estimates, and find intergenerational correlations for sons and daughters that are comparable to those found in the USA and the UK. Sons earn more than daughters conditional on education and parents’ rank. Observable household characteristics and unobservables contribute about the same to the correlations, both more than education.

Intergenerational earnings mobility in Taiwan: 1990–2010

In this paper, we study the intergenerational earnings mobility between fathers and sons in Taiwan. We apply the two-sample approach developed by Bjorklund and Jantti (Am Econ Rev 87(5):1009–1018, 1997) and find that the intergenerational earnings elasticity in Taiwan was around 0.4–0.5 in both the early 1990s and the late 2000s. We also estimate the intergenerational rank association in earnings to have been around 0.3 in both periods. Intergenerational earnings mobility in Taiwan is similar to that in less mobile countries such as the USA, and it appears to remain stable during a period of rapid economic development.

Intergenerational Earnings Mobility and Returns to Education in Hong Kong: A Developed Society with High Economic Inequality

The Great Gatsby curve shows societies with higher levels of economic inequality to exhibit lower levels of intergenerational mobility, with such mobility influenced by educational opportunities. Hong Kong features one of the world’s largest degrees of economic inequality, but has also witnessed a substantial expansion in tertiary education in the past two decades. This paper investigates the change in intergenerational earnings mobility and returns to education in Hong Kong over time. Data were drawn from the 1996, 2006 and 2016 Hong Kong Population By-Censuses. Instrumental variables regression was performed to estimate the change in the average level of such mobility, and instrumental variables quantile regression to estimate the change in the non-linear pattern of intergenerational mobility and returns to education. The findings show the average level of intergenerational mobility has been improved, with intergenerational elasticity decreasing from 0.37 in 1996 to 0.26 in 2006 and 0.23 in 2016. However, intergenerational economic transmission among high-earners remains persistently strong. Examination of the non-linear pattern shows that it is the reproduction of wealth rather than the reproduction of poverty that has led to intergenerational persistence in Hong Kong. A similar pattern was observed in 1996, 2006 and 2016. Returns to non-degree tertiary education were similar across the earnings distribution in 1996 and 2016 but more valuable for low-earners in 2006. Degree-level tertiary education is persistently more valuable for high- than low-earners, which exacerbated earnings inequality in 1996, 2006 and 2016.

Breaking the Links: Natural Resource Booms and Intergenerational Mobility

Do large economic shocks increase intergenerational earnings mobility through creating new economic opportunities? Alternatively, do they reduce mobility by reinforcing the links between generations? In this paper, we estimate how the Norwegian oil boom starting in the 1970s affected intergenerational mobility. We find that this resource shock increased intergenerational mobility for cohorts entering the labor market at the beginning of the oil boom in those labor markets most affected by the growing oil industry. In particular, we show that individuals born to poor families in oil-affected regions were more likely to move to the top of their cohort's earnings distribution. Importantly, we reveal that preexisting local differences in intergenerational mobility did not drive these findings. Instead, we show that changes in the returns to education offer the best explanation for geographic differences in intergenerational mobility following the oil boom. In addition, we find that intergenerational mobility was significantly higher in oil-affected labor markets across three generations and that the oil boom broke the earnings link between grandfathers and their grandsons.

Intergenerational mobility in Korea

This study investigates intergenerational earnings mobility in Korea for sons born between 1958 and 1973 and compares Korea’s mobility to that of other nations. It uses data from the Korea Labor and Income Panel Study and the Household Income and Expenditure Survey conducted by the Korean National Statistics Bureau. Since no single Korean dataset includes information on both sons’ and their fathers’ adult earnings, this study follows the two-sample approach previously applied in Korea by Ueda (J Asian Econ 1–22, 2013), whose estimated intergenerational earnings elasticity is 0.22, and extends the analysis by using fathers’ earnings from a more approximal cohort. The estimate of around 0.4 is similar to estimates for some already developed countries and smaller than typical estimates for recently developing countries.

Voting, education, and the Great Gatsby Curve

High inequality goes hand in hand with low intergenerational earnings mobility across countries. Little is known about why the US is characterized by high inequality and low mobility, while the opposite tends to hold for Scandinavian countries. In an overlapping generations model, calibrated to the US, education policies are endogenized via probabilistic voting. By exploiting cross-country variation in the bias in voter turnout towards the educated and elderly, the model replicates the negative relation between inequality and public education expenditures and accounts for more than a quarter of the variation in inequality and mobility. For the US, I find that compulsory voting could foster mobility, whereas inequality would be hardly affected.

Economic Development and Intergenerational Earnings Mobility: Evidence from Taiwan

How economic development affects intergenerational earnings elasticity is not well-documented. In this paper, we estimate intergenerational earnings elasticities between fathers and sons in two periods. In the current period, 2005–2010, Taiwan is already a developed economy with slower economic growth. We apply the two-sample approach developed by BjA¶rklund and JA¤ntti (1997) and find that intergenerational earnings elasticity is around 0.4–0.5 in this period. In the earlier period, 1990–1994, Taiwan was still a developing economy with fast economic growth. We mimic the BjA¶rklund-JA¤ntti two-sample approach and use average earnings by occupation as a proxy for fathers’ earnings. To quantify potential bias, we apply the same method to the 2005–2010 data. Our proxy method yields similar estimates in both the early 1990s and late 2000s. These results suggest stable intergenerational transmission of economic status in Taiwan, despite its rapid economic development.

Two-Sample Two-Stage Least Squares (TSTSLS) estimates of earnings mobility: how consistent are they?

Academics and policymakers have shown great interest in cross-national comparisons of intergenerational earnings mobility. However, producing consistent and comparable estimates of earnings mobility is not a trivial task. In most countries researchers are unable to observe earnings information for two generations. They are thus forced to rely upon imputed data from different surveys instead. This paper builds upon previous work by considering the consistency of the intergenerational correlation (ρ) as well as the elasticity (β), how this changes when using a range of different instrumental (imputer) variables, and highlighting an important but infrequently discussed measurement issue. Our key finding is that, while TSTSLS estimates of β and ρ are both likely to be inconsistent, the magnitude of this problem is much greater for the former than it is for the latter. We conclude by offering advice on estimating earnings mobility using this methodology.

Do Education and Sex Matter for Intergenerational Earnings Mobility? Some Evidence from Australia

This paper analyses the intergenerational earnings mobility in Australia for all combinations of mothers, fathers, sons and daughters. We find that mobility is highest between parents and children of the opposite sex. Daughters are more mobile than sons with respect to fathers' earnings, but there is no statistical difference between the sexes' mobility with respect to mothers' earnings. We also consider how differing levels of mobility between the sexes may be related to the education level of the children. It was found that the father–son elasticity increases with son's education level and that the difference between son–father and daughter–father mobility may be associated with the higher levels of education obtained by females from less affluent backgrounds.

Intergenerational long-term effects of preschool-structural estimates from a discrete dynamic programming model

This paper formulates a structural dynamic programming model of preschool investment choices of altruistic parents and then empirically estimates the structural parameters of the model using the NLSY79 data. The paper finds that preschool investment significantly boosts cognitive and non-cognitive skills, which enhance earnings and school outcomes. It also finds that a standard Mincer earnings function, by omitting measures of non-cognitive skills on the right-hand side, overestimates the rate of return to schooling. From the estimated equilibrium Markov process, the paper studies the nature of within generation earnings distribution, intergenerational earnings mobility, and schooling mobility. The paper finds that a tax-financed free preschool program for the children of poor socioeconomic status generates positive net gains to the society in terms of average earnings, higher intergenerational earnings mobility, and schooling mobility.

Intergenerational Mobility of Earnings and Income Among Sons and Daughters in Vietnam

This paper empirically examines intergenerational economic mobility in Vietnam. The two-sample two-stage least squares estimation is employed to achieve the research objective using two primary samples of father-son pairs and father-daughter pairs from Vietnam Household Living Standards Survey of 2012, and one secondary sample from Vietnam Living Standards Survey of 1997-1998. The baseline intergenerational elasticity estimates show that Vietnam occupies the intermediate degrees of intergenerational mobility of earnings and income for both sons and daughters. In particular, a rise of 10% in fathers’ individual earnings is on average associated with an increase of 3.61% and 3.94% for sons’ individual earnings and individual income, respectively. The corresponding figures for daughters’ individual earnings and individual income are 2.84% and 3.33%, respectively. This paper also provides evidence on the average degree of inequality of opportunity in Vietnam during its transition from a central planning economy to a market-oriented system.

Intergenerational Mobility of Earnings and Income Among Sons and Daughters in Vietnam

<p>In this thesis, I investigate intergenerational mobility of earnings and income among sons and daughters in Vietnam. In particular, my objective is to estimate intergenerational elasticity (IGE) of sons’ and daughters’ individual earnings, individual income, and family income with respective to father’s individual earnings. The two-sample two-stage least squares (TS2SLS) estimation is employed to achieve the research objective using two primary samples of father-son pairs and father-daughter pairs from Vietnam Household Living Standard Surveys (VHLSS) of 2012 and one secondary sample from Vietnam Living Standard Surveys (VLSS) of 1997-98. My results show that the baseline IGE estimates of Vietnamese sons are 0.361, 0.394 and 0.567 for individual earnings, individual income, and family income, respectively. For Vietnamese daughters, the baseline IGE estimates are 0.284, 0.333 and 0.522 for individual earnings, individual income, and family income, respectively. These IGE estimates explicitly reveal that Vietnam has the intermediate degrees of individual earnings and individual income mobility, and the low degree of family income mobility cross generations for both sons and daughters by the international comparison.</p>

Two-Sample Two-Stage Least Squares (TSTSLS) Estimates of Earnings Mobility: How Consistent are They?

Academics and policymakers have shown great interest in cross-national comparisons of intergenerational earnings mobility. However, producing consistent and comparable estimates of earnings mobility is not a trivial task. In most countries researchers are unable to observe earnings information for two generations. They are thus forced to rely upon imputed data instead. This paper builds upon previous work by considering the consistency of the intergenerational correlation (ρ) as well as the elasticity (β), how this changes when using a range of different instrumental (imputer) variables, and highlighting an important but infrequently discussed measurement issue. Our key finding is that, while TSTSLS estimates of β and ρ are both likely to be inconsistent, the magnitude of this problem is much greater for the former than it is for the latter. We conclude by offering advice on estimating earnings mobility using this methodology.