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The Broken Elevator: Declining Absolute Mobility of Living Standards in Germany

Author

Listed:
  • Timm Bönke
  • Astrid Harnack-Eber
  • Holger Lüthen

Abstract

This study provides the first absolute income mobility estimates for postwar Germany. Using various micro data sources, we uncover a steep decline in absolute mobility rates from 81 percent to 59 percent for children’s birth cohorts 1962 through 1988. This trend is robust across different ages, family sizes, measurement methods, copulas, and data sources. Across the parental income distribution, we find that children from middle class families experienced the largest percentage point drop in absolute income mobility (-31pp). Our counterfactual analysis shows that lower economic growth rates and higher income inequality contributed similarly to these trends.

Suggested Citation

  • Timm Bönke & Astrid Harnack-Eber & Holger Lüthen, 2024. "The Broken Elevator: Declining Absolute Mobility of Living Standards in Germany," Discussion Papers of DIW Berlin 2068, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp2068
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    References listed on IDEAS

    as
    1. Timm Bönke & Giacomo Corneo & Holger Lüthen, 2015. "Lifetime Earnings Inequality in Germany," Journal of Labor Economics, University of Chicago Press, vol. 33(1), pages 171-208.
    2. Markus M. Grabka & Jan Goebel & Carsten Schröder & Jürgen Schupp, 2016. "Shrinking Share of Middle-Income Group in Germany and the US," DIW Economic Bulletin, DIW Berlin, German Institute for Economic Research, vol. 6(18), pages 199-210.
    3. Richard Blundell & Luigi Pistaferri & Itay Saporta-Eksten, 2016. "Consumption Inequality and Family Labor Supply," American Economic Review, American Economic Association, vol. 106(2), pages 387-435, February.
    4. Yonatan Berman, 2022. "The Long-Run Evolution of Absolute Intergenerational Mobility," American Economic Journal: Applied Economics, American Economic Association, vol. 14(3), pages 61-83, July.
    5. Miles Corak, 2013. "Income Inequality, Equality of Opportunity, and Intergenerational Mobility," Journal of Economic Perspectives, American Economic Association, vol. 27(3), pages 79-102, Summer.
    6. Nikoloulopoulos, Aristidis K. & Joe, Harry & Li, Haijun, 2012. "Vine copulas with asymmetric tail dependence and applications to financial return data," Computational Statistics & Data Analysis, Elsevier, vol. 56(11), pages 3659-3673.
    7. Anders Björklund, 1993. "A Comparison Between Actual Distributions Of Annual And Lifetime Income: Sweden 1951–89," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 39(4), pages 377-386, December.
    8. Raj Chetty & Nathaniel Hendren & Patrick Kline & Emmanuel Saez, 2014. "Where is the land of Opportunity? The Geography of Intergenerational Mobility in the United States," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(4), pages 1553-1623.
    9. Timm Bönke & Geraldine Dany-Knedlik & Laura Pagenhardt, 2023. "Neues DIW-Modell kann Einkommensverteilung am aktuellen Rand vorhersagen – Ungleichheit dürfte in diesem Jahr leicht zunehmen," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 90(24), pages 326-332.
    10. Orazio P. Attanasio & Luigi Pistaferri, 2016. "Consumption Inequality," Journal of Economic Perspectives, American Economic Association, vol. 30(2), pages 3-28, Spring.
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    More about this item

    Keywords

    Absolute mobility; Intergenerational mobility; Income distributions; Consumption; Inequality;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H0 - Public Economics - - General
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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