IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/66334.html
   My bibliography  Save this paper

A Theory of Intergenerational Mobility

Author

Listed:
  • Becker, Gary
  • Kominers, Scott Duke
  • Murphy, Kevin M.
  • Spenkuch, Jörg L.

Abstract

We develop a model of intergenerational resource transmission that emphasizes the link between cross-sectional inequality and intergenerational mobility. By drawing on first principles of human capital theory, we derive several novel results. In particular, we show that, even in a world with perfect capital markets and without differences in innate ability, wealthy parents invest, on average, more in their offspring than poorer ones. As a result, persistence of economic status is higher at the top of the income distribution than in the middle. Successive generations of the same family may even cease to regress towards the mean. Moreover, we demonstrate that government interventions intended to ameliorate inequality may in fact lower intergenerational mobility—even when they do not directly favor the rich. Lastly, we consider how mobility is affected by changes in the marketplace.

Suggested Citation

  • Becker, Gary & Kominers, Scott Duke & Murphy, Kevin M. & Spenkuch, Jörg L., 2015. "A Theory of Intergenerational Mobility," MPRA Paper 66334, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:66334
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/66334/1/MPRA_paper_66334.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Sheela Kennedy & Steven Ruggles, 2014. "Breaking Up Is Hard to Count: The Rise of Divorce in the United States, 1980–2010," Demography, Springer;Population Association of America (PAA), vol. 51(2), pages 587-598, April.
    2. Lawrence F. Katz & Kevin M. Murphy, 1992. "Changes in Relative Wages, 1963–1987: Supply and Demand Factors," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(1), pages 35-78.
    3. Jantti, Markus & Bratsberg, Bernt & Roed, Knut & Raaum, Oddbjorn & Naylor, Robin & Osterbacka, Eva & Bjorklund, Anders & Eriksson, Tor, 2005. "American exceptionalism in a new light: a comparison of intergenerational earnings mobility in the Nordic countries, the United Kingdom and the United States," Economic Research Papers 269752, University of Warwick - Department of Economics.
    4. Solon, Gary, 1999. "Intergenerational mobility in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 29, pages 1761-1800, Elsevier.
    5. Bhashkar Mazumder, 2005. "Fortunate Sons: New Estimates of Intergenerational Mobility in the United States Using Social Security Earnings Data," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 235-255, May.
    6. Michael F. Lovenheim, 2011. "The Effect of Liquid Housing Wealth on College Enrollment," Journal of Labor Economics, University of Chicago Press, vol. 29(4), pages 741-771.
    7. Gary S. Becker & Nigel Tomes, 1994. "Human Capital and the Rise and Fall of Families," NBER Chapters, in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education, Third Edition, pages 257-298, National Bureau of Economic Research, Inc.
    8. Jeremy Greenwood & Nezih Guner & Georgi Kocharkov & Cezar Santos, 2014. "Marry Your Like: Assortative Mating and Income Inequality," American Economic Review, American Economic Association, vol. 104(5), pages 348-353, May.
    9. 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.
    10. Miles Corak & Andrew Heisz, 1999. "The Intergenerational Earnings and Income Mobility of Canadian Men: Evidence from Longitudinal Income Tax Data," Journal of Human Resources, University of Wisconsin Press, vol. 34(3), pages 504-533.
    11. Loury, Glenn C, 1981. "Intergenerational Transfers and the Distribution of Earnings," Econometrica, Econometric Society, vol. 49(4), pages 843-867, June.
    12. Philippe Belley & Lance Lochner, 2007. "The Changing Role of Family Income and Ability in Determining Educational Achievement," Journal of Human Capital, University of Chicago Press, vol. 1(1), pages 37-89.
    13. Claudia Olivetti & M. Daniele Paserman, 2015. "In the Name of the Son (and the Daughter): Intergenerational Mobility in the United States, 1850-1940," American Economic Review, American Economic Association, vol. 105(8), pages 2695-2724, August.
    14. Gary Solon, 2018. "What Do We Know So Far about Multigenerational Mobility?," Economic Journal, Royal Economic Society, vol. 128(612), pages 340-352, July.
    15. Ellwood, David T. & Jencks, Christopher, 2004. "The Spread of Single-Parent Families in the United States since 1960," Working Paper Series rwp04-008, Harvard University, John F. Kennedy School of Government.
    16. Jonathan Guryan & Erik Hurst & Melissa Kearney, 2008. "Parental Education and Parental Time with Children," Journal of Economic Perspectives, American Economic Association, vol. 22(3), pages 23-46, Summer.
    17. O. Ashenfelter & D. Card (ed.), 1999. "Handbook of Labor Economics," Handbook of Labor Economics, Elsevier, edition 1, volume 3, number 3.
    18. Gary S. Becker & Kevin M. Murphy & Jörg L. Spenkuch, 2016. "The Manipulation of Children's Preferences, Old-Age Support, and Investment in Children's Human Capital," Journal of Labor Economics, University of Chicago Press, vol. 34(S2), pages 3-30.
    19. Mikael Lindahl & Mårten Palme & Sofia Sandgren Massih & Anna Sjögren, 2015. "Long-Term Intergenerational Persistence of Human Capital: An Empirical Analysis of Four Generations," Journal of Human Resources, University of Wisconsin Press, vol. 50(1), pages 1-33.
    20. Black, Sandra E. & Devereux, Paul J., 2011. "Recent Developments in Intergenerational Mobility," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 16, pages 1487-1541, Elsevier.
    21. Corak,Miles (ed.), 2004. "Generational Income Mobility in North America and Europe," Cambridge Books, Cambridge University Press, number 9780521827607, October.
    22. Gregory Clark, 2015. "The Son Also Rises: Surnames and the History of Social Mobility," Economics Books, Princeton University Press, edition 1, volume 1, number 10181-2.
    23. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-442, June.
    24. Zhen Zeng & Yu Xie, 2014. "The Effects of Grandparents on Children’s Schooling: Evidence From Rural China," Demography, Springer;Population Association of America (PAA), vol. 51(2), pages 599-617, April.
    25. Gary Solon, 2013. "Theoretical Models of Inequality Transmission across Multiple Generations," NBER Working Papers 18790, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jörg L. Spenkuch, 2015. "Intergenerational Mobility and Income Inequality," Book Chapters, in: Tom Church & Chris Miller & John B. Taylor (ed.), Inequality & Economic Policy, chapter 4, Hoover Institution, Stanford University.
    2. Anna Christina D'Addio, 2007. "Intergenerational Transmission of Disadvantage: Mobility or Immobility Across Generations?," OECD Social, Employment and Migration Working Papers 52, OECD Publishing.
    3. Olivetti, Claudia & Paserman, M. Daniele & Salisbury, Laura, 2018. "Three-generation mobility in the United States, 1850–1940: The role of maternal and paternal grandparents," Explorations in Economic History, Elsevier, vol. 70(C), pages 73-90.
    4. Robert Lucas & Sari Kerr, 2013. "Intergenerational income immobility in Finland: contrasting roles for parental earnings and family income," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(3), pages 1057-1094, July.
    5. 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.
    6. Daniel D. Schnitzlein, 2016. "A New Look at Intergenerational Mobility in Germany Compared to the U.S," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(4), pages 650-667, December.
    7. Adrian Adermon & Mikael Lindahl & Mårten Palme, 2021. "Dynastic Human Capital, Inequality, and Intergenerational Mobility," American Economic Review, American Economic Association, vol. 111(5), pages 1523-1548, May.
    8. P. Jenkins, Stephen & Jäntti, Markus, 2013. "Income mobility," ISER Working Paper Series 2013-23, Institute for Social and Economic Research.
    9. Colagrossi, Marco & d’Hombres, Béatrice & Schnepf, Sylke V, 2020. "Like (grand)parent, like child? Multigenerational mobility across the EU," European Economic Review, Elsevier, vol. 130(C).
    10. Eisenhauer, Philipp & Pfeiffer, Friedhelm, 2008. "Assessing intergenerational earnings persistence among German workers," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 41(2/3), pages 119-137.
    11. Rauh, Christopher, 2017. "Voting, education, and the Great Gatsby Curve," Journal of Public Economics, Elsevier, vol. 146(C), pages 1-14.
    12. Sebastian Till Braun & Jan Stuhler, 2018. "The Transmission of Inequality Across Multiple Generations: Testing Recent Theories with Evidence from Germany," Economic Journal, Royal Economic Society, vol. 128(609), pages 576-611, March.
    13. Eisenhauer, Philipp & Pfeiffer, Friedhelm, 2008. "Assessing intergenerational earnings persistence among German workers," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 41(2/3), pages 119-137.
    14. Carsten Andersen, 2019. "Intergenerational Health Mobility: Evidence from Danish Registers," Economics Working Papers 2019-04, Department of Economics and Business Economics, Aarhus University.
    15. Jørgen Modalsli & Kelly Vosters, 2024. "Spillover Bias in Multigenerational Income Regressions," Journal of Human Resources, University of Wisconsin Press, vol. 59(3), pages 743-776.
    16. Ben-Halima, B. & Chusseau, N. & Hellier, J., 2014. "Skill premia and intergenerational education mobility: The French case," Economics of Education Review, Elsevier, vol. 39(C), pages 50-64.
    17. Nathaniel G. Hilger, 2015. "The Great Escape: Intergenerational Mobility in the United States Since 1940," NBER Working Papers 21217, National Bureau of Economic Research, Inc.
    18. Sander Wagner, 2017. "Children of the Reunification: Gendered Effects on Intergenerational Mobility in Germany," Working Papers 2017-03, Center for Research in Economics and Statistics.
    19. Hellier, Joël, 2017. "Stratified higher education,social mobility at the top and efficiency: The case of the French ‘Grandes écoles’," MPRA Paper 76724, University Library of Munich, Germany.
    20. Florencia Torche, 2015. "Analyses of Intergenerational Mobility," The ANNALS of the American Academy of Political and Social Science, , vol. 657(1), pages 37-62, January.

    More about this item

    Keywords

    intergenerational mobility; human capital; inequality;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D10 - Microeconomics - - Household Behavior - - - General
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J0 - Labor and Demographic Economics - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:66334. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.