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A lifecycle estimator of intergenerational income mobility

Author

Listed:
  • Mello, Ursula

    (Pontifical Catholic University of Rio de Janeiro)

  • Nybom, Martin

    (IFAU - Institute for Evaluation of Labour Market and Education Policy)

  • Stuhler, Jan

    (Universidad Carlos III de Madrid)

Abstract
The estimation of intergenerational mobility ideally requires full income histories to determine lifetime incomes. However, as applications are typically based on shorter snapshots, estimates are subject to lifecycle bias. Using long income series from Sweden and the US, we illustrate that standard correction methods struggle to account for one important property of income processes: children from more affluent families tend to experience faster income growth, even conditional on their own characteristics. We propose a lifecycle estimator that captures this pattern and that performs well across different settings. We then apply this estimator to study mobility trends in Sweden and in the US, including for more recent cohorts that could not be considered in prior work. Despite rising income inequality, intergenerational income mobility remained largely stable over cohorts born 1950-1989 in both countries.

Suggested Citation

  • Mello, Ursula & Nybom, Martin & Stuhler, Jan, 2022. "A lifecycle estimator of intergenerational income mobility," Working Paper Series 2022:21, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    • Handle: RePEc:hhs:ifauwp:2022_021
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    References listed on IDEAS

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    Cited by:

    1. Caue Dobbin & Tom Zohar, 2023. "Quantifying the Role of Firms in Intergenerational Mobility," CESifo Working Paper Series 10758, CESifo.
    2. Brandén, Gunnar & Nybom, Martin & Vosters, Kelly, 2023. "Like Mother, like Child? The Rise of Women's Intergenerational Income Persistence in Sweden and the United States," IZA Discussion Papers 16152, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Intergenerational mobility; lifecycle bias; income processes;
    All these keywords.

    JEL classification:

    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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