Family-Specific Intergenerational Income Mobility

Irina Murtazashvili, University of Pittsburgh

We study an alternative measure of intergenerational income mobility, which allows for the variation in the intergenerational correlation across the population of families, due to multiplicative unobserved family-specific characteristics. A combination of our theoretical and empirical findings suggests that there is a negative association between the income of fathers and intergenerational mobility in their families. We find that the consistent estimate of the intergenerational correlation averaged across the population of unobservables is above the estimates of intergenerational mobility found in earlier studies. This result emphasizes that the population correlation coefficient might be an inappropriate measure of intergenerational mobility in a typical family. Our alternative measure of intergenerational mobility suggests that the intergenerational income persistence is stronger for a typical family than we might think when using a population correlation coefficient between father's and son's earnings to measure intergenerational mobility.