It's All about the Parents: Inequality Transmission across Three Generations in Sweden (original) (raw)
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Intergenerational Income Mobility in Sweden: What Do Tax-Data Show?
Review of Income and Wealth, 2000
The aim of this paper is to investigate intergenerationai income mobiiity in Sweden by meaiis of a representative sample drawn from tax-data files. Longitudinal data on actual parent-child pairs spanning 1978-92 are employed. Regression and correlation coefficients are analyzed and transition matrices calculated in order to investigate income mobility over generations. The results achieved show high intergenerational income mobility in Sweden between fathers and sons in comparison to estimations performed in most other countries and more especially compared to the U.S. This indicates that Sweden does not only have lower cross-sectional income inequality, but also higher intergenerational income mobility than those countries. The mother's earnings influence children's earnings less than the father's. However, the mother's earnings correlate more strongly with a daughter's earnings than they do with that of a son. The major indication of immobility across generations is found in the upper income deciles. The question whether economic status is transferred from one generation to another has gained increased attention in recent years. Consequently there is a substantial body of literature where the correlation in permanent earnings is estimated across generations. The aim of this paper is to investigate intergenerational income mobility in Sweden using a representative sample drawn from tax-data files. To study intergenerational transmission of earnings status is of interest when studying the character of inequality in a specific society. If there is perfect mobility across generations, it will not matter if your parents belonged to the 90th income percentile or the 10th. The child is independent of its parent's income position. If on the other hand there is no mobility, the child will end up in exactly the same income position as its parents. Most societies are somewhere in-between these extremes and in this study the position of Sweden's intergenerational income mobility will be investigated. Various attempts have been made to estimate the intergenerational income correlation in Sweden. One example is Gustafsson (1994), who uses a homogenous sample where the fathers' incomes were observed for one year only.' However, most studies on intergenerational income mobility have been generated from U.S. data (Behrman and Taubman (1985), Peters (1992), Solon (1992) and Zimmerman (1992)), though some studies of other countries exist as Recently, Note: Financial support from Swedish Council for Social Research (SFR) is gratefully acknowledged. The author would like to thank Bjorn Gustafsson, Katarina Katz, Pernilla Dahlin and an anonymous referee for helpful comments and suggestions. h he data consists of sons born between 1939 to 1946 living in Stockholm in the middle of the 1950s. 2~xamples of this are United Kingdom [
Journal of Public Economics, 2012
This paper presents new evidence on intergenerational mobility in the top of the income and earnings distribution. Using a large dataset of matched father-son pairs in Sweden, we find that intergenerational transmission is very strong in the top, more so for income than for earnings. In the extreme top (top 0.1 percent) income transmission is remarkable with an IG elasticity above 0.9. We also study potential transmission mechanisms and find that sons' IQ, non-cognitive skills and education are all unlikely channels in explaining this strong transmission. Within the top percentile, increases in fathers' income are, if anything, negatively associated with these variables. Wealth, on the other hand, has a significantly positive association. Our results suggest that Sweden, known for having relatively high intergenerational mobility in general, is a society where transmission remains strong in the very top of the distribution and that wealth is the most likely channel.
2007
This study uses an extraordinary Swedish data set to explore the sources of the intergenerational transmission of socioeconomic status. Merging data from administrative sources and censuses, we investigate the association between sons' and daughters' socioeconomic outcomes and those of their biological and rearing parents. Our analysis focuses on children raised in six different family circumstances: raised by both biological parents, raised by the biological mother without a stepfather, raised by the biological mother with a stepfather, raised by the biological father without a stepmother, raised by the biological father with a stepmother, and raised by two adoptive parents. Relative to the existing literature, the most remarkable feature of our data set is that it contains information on the biological parents even when they are not the rearing parents. We specify a simple additive model of pre-birth (including genetic) and post-birth influences and examine the model's ability to provide a unified account of the intergenerational associations in all six family types. Our results suggest substantial roles for both pre-birth and post-birth factors.
Journal of Labor Economics, 2016
In recent work, Gregory Clark and coauthors argue that rates of social mobility are constant across countries and generally much lower than traditionally estimated. The main explanation is that traditional estimates of intergenerational persistence are heavily attenuated because they use only one proxy measure (e.g., earnings) of underlying status. We examine this hypothesis within a suitable latent-variable framework, incorporating multiple proxy measures into a single "least-attenuated" estimate of persistence in latent status. With rich administrative data for Sweden, we exploit detailed proxy measures to test this proposition, and also conduct a Sweden-U.S. comparison. We find no evidence of substantial bias in prior estimates, or that the Sweden-U.S. difference in persistence is smaller than found in previous research. We further explore the concept of family status by incorporating mothers, thereby also contributing to the literature on intergenerational transmission for women. We find that while mothers' income is a poor proxy for status, incorporating information on mothers' occupation improves the ability to capture transmission from mothers to both sons and daughters.
Trends in Intergenerational Mobility across Offspring's Earnings Distribution in Norway
Industrial Relations, 2007
Using register data for Norwegian cohorts born in 1950Norwegian cohorts born in , 1955Norwegian cohorts born in , and 1960 found intergenerational earnings mobility to be high, and lower at the lower end of offspring's earnings distribution than at the upper end. The findings also indicate that mobility has increased over time and that the increase is somewhat higher for lower earnings. The increase in earnings mobility over time is larger for women than for men. * The authors' affiliations are, respectively,
How Much Scope for a Mobility Paradox? The Relationship between Social and Income Mobility in Sweden
Sociological Science, 2016
It is often pointed out that conclusions about intergenerational (parent-child) mobility can differ depending on whether we base them on studies of class or income. We analyze empirically the degree of overlap in income and social mobility; we demonstrate mathematically the nature of their relationship; and we show, using simulations, how intergenerational income correlations relate to relative social mobility rates. Analyzing Swedish longitudinal register data on the incomes and occupations of over 300,000 parent-child pairs, we find that social mobility accounts for up to 49 percent of the observed intergenerational income correlations. This figure is somewhat greater for a fine-graded micro-class classification than a five-class schema and somewhat greater for women than men. There is a positive relationship between intergenerational social fluidity and income correlations, but it is relatively weak. Our empirical results, and our simulations verify that the overlap between income mobility and social mobility leaves ample room for the two indicators to move in different directions over time or show diverse patterns across countries. We explain the circumstances in which income and social mobility will change together or co-vary positively and the circumstances in which they will diverge.
Rich Dad, Smart Dad: Decomposing the Intergenerational Transmission of Income
Journal of Political Economy, 2012
We construct a simple model, consistent with , that decomposes the intergenerational income elasticity into the causal effect of financial resources, the mechanistic transmission of human capital, and the role that human capital plays in the determination of father's permanent income. We show how a particular set of instrumental variables could separately identify the money and human capital transmission effects. We further outline two instrumental variables methods for bounding the structural parameters of our model in the presence of imperfect instruments. Using data from a thirty-five percent sample of Swedish sons and their fathers, we show that only a minority of the intergenerational income elasticity can be plausibly attributed to the causal effect of fathers' financial resources.
Intergenerational social mobility research has a longstanding tradition. More recently, there has been a growing interest in a multigenerational perspective within this context. Our study investigates the role of extended kin using large-scale Swedish register data from 2001-2003. Findings reveal that aunts' and uncles' class does significantly affect someone's class position even when controlling for parental and individual characteristics. Higher class extended kin increases chances for upward social mobility while lower class extended kin decreases them. So far, it remained elusive how such " dynastic " effects come about. Our results favor a sociological explanation that emphasizes the transferal of social and cultural capital across generations: 1) women growing up in lower income neighborhoods benefit more from higher-class kin, and 2) extended kin effects decrease with geographic distance.
Intergenerational Earnings Mobility in Norway: Levels and Trends*
Scandinavian Journal of Economics, 2005
Using longitudinal data for Norwegian children born in 1950Norwegian children born in , 1955Norwegian children born in , 1960Norwegian children born in and 1965, we find a relatively high degree of earnings mobility. There is no tendency toward decreasing mobility over the cohorts. Conditioning on the position in the earnings distribution, the analysis indicates quite high mobility in the middle of the distribution and somewhat more persistence at the top and bottom. This approach also reveals increased mobility over time for sons, but a less clear picture for daughters.