Measuring Intergenerational Income Mobility: A Synthesis of Approaches

Abstract

The literature on intergenerational income mobility uses a diverse set of measures and there is limited knowledge about whether these measures provide similar information and yield similar conclusions. We provide a framework to highlight the key concepts and properties of the different estimators. We then show how these measures relate to one another empirically. Our main analysis uses income tax data from Australia to produce a comprehensive set of empirical estimates for each of 19 different mobility measures at both the national and regional level. We supplement this analysis with other data that uses either within or between country variation in mobility measures. A key finding is that there is a clear distinction between relative and absolute measures both conceptually and empirically. A region may be high with respect to absolute mobility but could be low with respect to relative mobility. However, within broad categories, the different mobility measures tend to be highly correlated. For rank-based estimators, we highlight the importance of how the choice of the distribution used for calculating ranks can play a critical role in determining its properties as well as affect empirical findings. These patterns of results are important for policy makers whose local economy might fare well according to some mobility indicators but not others. * This article was prepared for the Journal of Economic Literature and is under review. We thank Steven Durlauf for helpful guidance and anonymous reviewers for their comments. We also thank Francisco Ferreira and Markus Jäntti for helpful comments and participants at the workshop on Aging, Family and Social Insurance in Solstrand, Norway and the ZEW Workshop on Social Mobility and Economic Performance for their feedback, and Aastha Rajan for excellent research assistance. This research uses data from the Australian Taxation Office. All findings, opinions and conclusions are those of the authors and do not necessarily represent the views of the Australian Government or any of its agencies. The views expressed here do not reflect those of the Federal Reserve Bank of Chicago or the Federal Reserve system or the Australian Treasury. The research plan was approved by the Australian National University Human Ethics Committee, protocol number 2017/832.

Shades of social mobility: Colorism, ethnic origin and intergenerational social mobility.

“…As a result of these transformations, estimating rank-based measures of social mobility on this data leads to measures of change in positions of the national distribution abstracting from systemic regional differences. Following Deutscher and Mazumder (2021) the measures are not strictly positional, as changes in the group mean of the outcome variable for one group between one period and the next lead to changes in the rank-persistence coefficient of all groups. Together with the sample size for the light-skinned indigenous Mexicans, this prevents me from analyzing if there exists regional heterogeneity in the incidence of colorism across groups of different ethnic origins.…”

“…For recent surveys on the subject seeCholli and Durlauf (2022);Deutscher and Mazumder (2021) 2 By stratification structure I refer to the set of formal and informal institutions that produce intergroup inequalities and hierarchies in society. SeeDarity Jr. (2022) …”

Growing Up Together: Sibling Correlation, Parental Influence, and Intergenerational Educational Mobility in Developing Countries

“…In a forthcoming paper, Deutscher and Mazumder (2022) discuss 19 measures of intergenerational mobility and nd that some of them are only weakly correlated with each other, suggesting that they measure very dierent concepts of economic mobility. When dierent studies use dierent measures of mobility capturing disparate economic concepts, it is impossible to rank countries in terms of intergenerational mobility based on the evidence from individual country studies.…”

“…For discussions on this point, seeBjorklund and Salvanes (2011),Bjorklund et al (2010),Deutscher and Mazumder (2022). 8 IOP can include variables that represent factors not shared by the siblings.…”

“…See, for example, the discussion byDeutscher andMazumder (2022), andJantti (2020). We discuss the dierences between these two approaches later in the paper.14 Recent contributions on intergenerational educational mobility in developing countries includeKundu and Sen (2022),Azam and Bhatt (2015),Azam (2016),Emran and Shilpi (2015) on India,Fan et al (2021),Emran and Sun (2015) on China, Torche (2015b) on Mexico,Assaad and Saleh (2018) on Jordan;Ahsan et al (2022),Ahsan et al (2021) on Indonesia.…”