The Political Economy of Intergenerational Income Mobility

Andrea Ichino, Loukas Karabarbounis and Enrico Moretti

No 15946, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The intergenerational elasticity of income is generally considered one of the best summary measures of the degree to which a society gives equal opportunity of success to all its members, irrespective of their family background. We present a parsimonious political economy model and show how the interaction between private and collective decisions determines the equilibrium level of mobility. Contrary to what it is generally assumed, a low correlation between father income and son income is not always desirable, as it may imply more inefficiency due to the distortionary effects of mobility-enhancing public policies. Moreover, taking into account the heterogeneity in preferences for intergenerational mobility leads to the conclusion that even if a fully mobile society is desirable ex ante, it may not be politically sustainable ex post. Our model clarifies the structural parameters behind the widely studied intergenerational elasticity of income in terms of political economy forces. Finally, we show some empirical evidence on the relationship between intergenerational elasticity of income across countries and its underlying determinants that is consistent with the predictions of the model.

JEL-codes: J01 (search for similar items in EconPapers)
Date: 2010-04
New Economics Papers: this item is included in nep-pol
Note: CH LS
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Citations: View citations in EconPapers (4)

Published as Andrea Ichino & Loukas Karabarbounis & Enrico Moretti, 2011. "The Political Economy Of Intergenerational Income Mobility," Economic Inquiry, Western Economic Association International, vol. 49(1), pages 47-69, 01.

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Related works:
Journal Article: THE POLITICAL ECONOMY OF INTERGENERATIONAL INCOME MOBILITY (2011)
Working Paper: The political economy of intergenerational income mobility (2010)
Working Paper: The Political Economy of Intergenerational Income Mobility (2010)
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