Intergenerational Earnings Inequality in Italy: New Evidence and Main Mechanisms

This article provides new estimates of intergenerational earnings inequality in Italy, shedding light on the mechanisms behind the association of gross earnings between fathers and sons. Using a dataset built merging the 2005 wave of the Italian component of the EU-SILC survey with administrative information on the whole working career of individuals sampled in that wave, we rely on the two-sample two-stage least squares method to predict fathers earnings and compute intergenerational elasticities and imputed rank-rank slopes, also trying to reduce possible attenuation and life-cycle biases. Confirming previous evidence, we find that Italy is characterised by a relatively high intergenerational earnings inequality in cross country comparison. Extending previous analyses, we show that the size of the intergenerational association enlarges when sons at older ages and multi-annual averages of pseudo-fathers and sons earnings are considered. Furthermore, running estimates in which possible mediating factors of the parental influence are included among the covariates, we find that a high intergenerational association persists when sons education and occupation are controlled for.