Accounting for Individual-Specific Heterogeneity in Intergenerational Income Mobility

Yoosoon Chang (), Steven Durlauf, Bo Hu and Joon Y. Park

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: This paper proposes a fully nonparametric model to investigate the dynamics of intergenerational income mobility. In our model, an individual’s income class probabilities depend on parental income in a manner that accommodates nonlinearities and interactions among various individual characteristics and parental characteristics, including race, education, and parental age at childbearing. Consequently, we offer a generalization of Markov chain mobility models. We employ kernel techniques from machine learning and further regularization for estimating this highly flexible model. Utilizing data from the Panel Study of Income Dynamics (PSID), we find that race and parental education play significant roles in determining the influence of parental income on children’s economic prospects.

Pages: 65 pages
Date: 2024-02, Revised 2024-12
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https://cama.crawford.anu.edu.au/sites/default/fil ... ed_december_2024.pdf Revised Version (application/pdf)
https://cama.crawford.anu.edu.au/sites/default/fil ... _february_2024_0.pdf Original Version (application/pdf)

Related works:
Working Paper: Accounting for Individual-Specific Heterogeneity in Intergenerational Income Mobility (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2024-18

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