Understanding income mobility: the role of education for intergenerational income persistence in the US, UK and Sweden

Paul Gregg, Jan Jonsson (), Lindsey Macmillan () and Carina Mood ()
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Jan Jonsson: Nuffield College, Oxford University and Swedish Institute for Social Research, Stockholm University
Carina Mood: Institute for Future Studies, Stockholm and Swedish Institute for Social Research, Stockholm University

No 13-12, DoQSS Working Papers from Quantitative Social Science - UCL Social Research Institute, University College London

Abstract: A growing number of studies in several countries over the past twenty years have documented the persistence in incomes across generations, and much of the current literature is seeking to understand the processes driving intergenerational mobility and how these differ across time periods and across countries. Education is commonly seen, just as in sociological studies of social mobility or status attainment, as the key driving force of intergenerational associations. In this paper we study the role of education for intergenerational income associations in three countries over time, and across the life-span of sons. We pay particular attention to issues of life-cycle bias and measurement error in modelling income mobility in a comparative setting. To explore the role of education, we utilise a three-stage framework that decomposes the intergenerational elasticity into three parts: the relationship between income and education, the returns to education, and the direct relationship between parental income and their child’s income in the next generation after controlling for education. We find that the US and the UK have high levels of income persistence (low mobility) across generations while Sweden is more moderate. Levels of educational inequality are surprisingly similar in all three countries with the majority of the difference between the US/UK and Sweden working through unequal returns to education and, more strikingly, inequality of opportunities for people with similar educational qualifications.

Keywords: Intergenerational mobility; children; education (search for similar items in EconPapers)
JEL-codes: J13 J31 J62 (search for similar items in EconPapers)
Date: 2013-10-08
New Economics Papers: this item is included in nep-edu, nep-eur, nep-lab and nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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