Jäntti, Markus , Bratsberg, Bernt , Røed, Knut , Raaum, Oddbjørn , Naylor, Robin Andrew, 1959-, Österbacka, Eva , Björklund, Anders and 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. Working Paper. University of Warwick, Department of Economics, Coventry.

Preview

PDF WRAP_Naylor_twerp_781.pdf - Requires a PDF viewer such as GSview, Xpdf or Adobe Acrobat Reader Download (296Kb)

Abstract

We develop methods and employ similar sample restrictions to analyse differences in intergenerational earnings mobility across the United States, the United Kingdom, Denmark, Finland, Norway and Sweden. We examine earnings mobility among pairs of fathers and sons as well as fathers and daughters using both mobility matrices and regression and correlation coefficients. Our results suggest that all countries exhibit substantial earnings persistence across generations, but with statistically significant differences across countries. Mobility is lower in the U.S. than in the U.K., where it is lower again compared to the Nordic countries. Persistence is greatest in the tails of the distributions and tends to be particularly high in the upper tails: though in the U.S. this is reversed with a particularly high likelihood that sons of the poorest fathers will remain in the lowest earnings quintile. This is a challenge to the popular notion of ’American exceptionalism’. The U.S. also differs from the Nordic countries in its very low likelihood that sons of the highest earners will show downward ’long-distance’ mobility into the lowest earnings quintile. In this, the U.K. is more similar to the U.S.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HD Industries. Land use. Labor
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Intergenerational relations, Occupational mobility, Wages
Series Name:	Warwick economic research papers
Publisher:	University of Warwick, Department of Economics
Place of Publication:	Coventry
Date:	December 2005
Number:	No.781
Number of Pages:	44
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access
Funder:	Nordic Council of Ministers (NCM), Yrjö Jahnssonin säätiö [Yrjö Jahnsson Foundation], Suomen Akatemia [Academy of Finland], Swedish Council for Working Life and Social Research
Grant number:	no. 149813-599 (NCM), project no. 206680 (AF)
References:	Alesina, A. & Glaeser, E. L. (2004). Fighting poverty in the US and Europe: a world of difference. Oxford: University Press. Atkinson, A. B. (1981). On intergenerational income mobility in Britain. Journal of Post Keynesian Economics, 13, pp.194–218. Atkinson, A. B., Maynard, A. K. & Trinder, C. G. (1983). Parents and children: incomes in two generations. Heinemann Educational Books. Bartholomew, D. J. (1982). Stochastic model for social processes. London: Wiley & Sons. Björklund, A. (1993). A comparison between actual distributions of annual and lifetime income. Review of Income and Wealth, 39(4), pp.377–386. Björklund, A. & Chadwick, L. (2003). Intergenerational income mobility in permanent and separated families. Economics Letters, 80, pp.239–246. Björklund, A., Eriksson, T., Jäntti, M., Raaum, O. & Österbacka, E. (2002). Brother correlations in earnings in Denmark, Finland, Norway and Sweden compared to the United States. Journal of Population Economics, 15(4), pp.757–772. Björklund, A. & Jäntti, M. (1997). Intergenerational income mobility in Sweden compared to the United States. American Economic Review, 87(4), pp.1009–1018. Björklund, A. & Jäntti, M. (2000). Intergenerational mobility of socio-economic status in comparative perspective. Nordic Journal of Political Economy, 26(1), pp.3–32. Blanden, J. (2005). Intergenerational mobility. Phd thesis, University College London, London. Blanden, J., Goodman, A., Gregg, P. & Machin, S. (2004). Changes in intergenerational mobility in Britain. In: M. Corak, (ed.) Generational income mobility in North America and Europe. Cambridge: Cambridge University Press, ch.6, pp. 122–146. Bonke, J., Hussain, M. A. & Munk, M. D. (2005). A comparison of Danish and international findings on integenerational earnings mobility. Unpublished manuscript, Copenhagen: Danish National Institute of Social Research. Bowles, S. & Gintis, H. (2002). The inheritance of inequality. Journal of Economic Perspectives, 16(3), pp.3–30. Bratberg, E., Nielsen, Ø. A. & Vaage, K. (2005). Intergenerational earnings mobility in Norway: levels and trends. Scandinavian Journal of Economics, 107(3), pp.419–435. Böhlmark, A. & Lindquist, M. J. (2005). Life-cycle variation in the association between current and lifetime income: country, gender and cohort differences. Working Paper 4/2005. Swedish Institute for Social Research, Stockholm University. Chadwick, L. (2002). Changes in intergenerational economic mobility in the United States. Unpublished Manuscript, Dept. of Economic, University of Michigan. Chadwick, L. & Solon, G. (2002). Intergenerational income mobility among daughters. American Economic Review, 92(1), pp.323–334. Checchi, D., Ichino, A. & Rustichini, A. (1999). More equal but less mobile? Education financing and intergenerational mobility in Italy and in the US. Journal of Public Economics, 74(3), pp.351 – 393. Corak, M. (2004a). Do poor children become poor adults? lessons for public policy from a cross country comparison of generational earnings mobility. Paper presented at Workshop on child poverty, UNICEF Innocenti Research Centre. Corak, M. (2004b). Generational income mobility in North America and Europe: an introduction. In: M. Corak, (ed.) Generational income mobility in North America and Europe. Cambridge: Cambridge University Press, ch.1, pp. 1–37. Corak, M., ed. (2004c). Generational income mobility in North America and Europe, Cambridge: Cambridge University Press. Corak, M. & Heisz, A. (1999). The intergenerational earnings and income mobility of Canadian men: evidence from longitudinal income tax data. Journal of Human Resources,34(3), pp.504–556. Couch, K. A. & Dunn, T. A. (1997). Intergenerational correlations in labor market status: a comparison of the United States and Germany. Journal of Human Resources 32(1), pp.210–232. Couch, K. A. & Lillard, D. R. (1998). Sample selection rules and the intergenerational correlation of earnings. Labour Economics, 5(3), pp.313–329. Couch, K. A. & Lillard, D. R. (2004). Nonlinearities in intergenerational mobility: a comparison of Germany and the United States. In: M. Corak, (ed.) Generational income mobility in North America and Europe. Cambridge: Cambridge University Press, ch.8, pp. 190– 206. Davison, A. C. & Hinkley, D. V. (1997). Bootstrap methods and their application. Cambridge: Cambridge University Press. Dearden, L., Machin, S. & Reed, H. (1997). Intergenerational mobility in Britain’, Economic Journal, 107(1), pp.47–66. Eide, E. & Showalter, M. (1999). Factors affecting the transmission of earnings across generations: a quantile regression approach. Journal of Human Resources, 34(2), pp.253–267. Erikson, R. & Goldthorpe, J. H. (1992a). The CASMIN project and the American Dream. European Sociological Review, 8(3), pp.283–305. Erikson, R. & Goldthorpe, J. H. (1992b). The constant flux - a study of class mobility in industrial societies. Oxford: Clarendon. Erikson, R. & Goldthorpe, J. H. (2002). Intergenerational inequality: a sociological perspective. Journal of Economic Perspectives, 16(3), pp.31–44. Eriksson, T., Bratsberg, B. & Raaum, O. (2005). Earnings persistence across generations: transmission through health? Unpublished paper presented at the EALE/SOLE meeting. Eriksson, T. & Jäntti, M. (1997). The distribution of earnings in Finland 1971–1990. European Economic Review, 41(9), pp.1763–1779. Ferrie, J. P. (2005). The end of American exceptionalism? Mobility in the United States since 1850. Journal of Economic Perspectives, 19(3). Fields, G. S. & Ok, E. S. (1999). The measurement of income mobility: an introduction to the literature. In: J. Silber, (ed.). Handbook of income inequality measurement. Recent Economic Thought. Boston: Kluwer Academic Publishers, ch.19, pp. 557–598. Grawe, N. D. (2004). Intergenerational mobility for whom? The experience of high- and lowearnings sons in international perspective. In: M. Corak, (ed.). Generational income mobility in North America and Europe. Cambridge: Cambridge University Press, ch. 4, pp.58–89. Grawe, N. D. (2005). Lifecycle bias in estimates of intergenerational earnings persistence. Labour Economics. In press. Gregg, P. & Machin, S. (1999). Childhood disadvantage and success of failure in the labour market. In: D. Blanchflower & R. Freeman, (eds) Youth employment and joblessness in advanced countries. National Bureau of Economic Research, Cambridge, MA. Gregg, P. & Machin, S. (2000). The relationship between childhood experience, subsequent educational attainment and adult labour market performance. In: K. Vleminckx & T. M. Smeeding, (eds). Child well-being, child poverty and child policy in modern nations. Aldershot: Avebury. Griffith, V. (2001). The myth of upward mobility. Financial Times . In Weekend Section January 21 2001. Haider, S. & Solon, G. (2005). Life-cycle variation in the association between current and lifetime earnings. Unpublished manuscript, University of Michigan. Lee, C.-I. & Solon, G. (2004). Trends in intergenerational income mobility. Unpublished Manuscript, Dept. of Economics, University of Michigan. Levine, D. I. & Mazumder, M. (2002). Choosing the right parents: changes in the intergenerational transmission of inequality between 1980 and the early 1990s. Working Paper 2002-08, Federal Reserve Bank of Chicago. Long, J. & Ferrie, J. P. (2005). A tale of two labor markets: intergenerational occupational mobility in Britain and the U.S. since 1850. Working Paper 11253, NBER, New York. Mazumder, B. (2005). Fortunate sons: new estimates of intergenerational mobility in the United States using social security earnings data. Review of Economics and Statistics, LXXXVII(2), pp.235–255. Pekkala, S. A. & Lucas, R. E. B. (2005). On the importance of finnishing school: half a century of inter-generational economic mobility. Discussion Papers 359, Government Institute for Economic Research, Helsinki. Raaum, O., Sørensen, E. & Salvanes, K. G. (2003). The impact of primary school reform on educational stratification: a Norwegian study of neighbourhood and school mate correlations. Swedish Economic Policy Review, 10(2). Raaum, O., Sørensen, E. & Salvanes, K. G. (2005). The neighbourhood is not what it used to be. Economic Journal. Forthcoming. Reville, R. T. (1995). Intertemporal and life cycle variation in measured intergenerational earnings mobility. Unpublished manuscript, RAND. Solon, G. (1999). Intergenerational mobility in the labor market. In: O. Ashenfelter & D. Card, (eds). Handbook of labor economics. Vol. 3, New York: Elsevier Science, pp. 1761–1800. Solon, G. M. (2002). Cross-country differences in intergenerational earnings mobility. Journal of Economic Perspectives, 16(3), pp.59–66. Statistics Finland (2001). Population census 2000 handbook, handbooks 35c, Helsinki: Statistics Finland. Österbacka, E. (2001). Family background and economic status in Finland. Scandinavian Journal of Economics, 103(3), pp.467–484.
URI:	http://wrap.warwick.ac.uk/id/eprint/81

Request changes to a record

Actions (login required)

View Item