So, if everybody’s income is 50 percent higher than their parents’,
that shows up as zero income mobility. On the other hand, if average
income stays constant, but a lot of low-earning parents have
high-earning children, and vice-versa, that shows up as high income
…is measured income mobility between generations really on the decline
in the U.S.? Not according to Gary Solon of the University of Michigan,
who is probably the leading American researcher in the field. (He is on
the advisory board of the Economic Mobility Project.) His most recent research
on the subject, in a paper co-authored with Chul-In Lee, concludes that
“intergenerational income mobility has not changed dramatically over
the last two decades.”
I once wrote (read the whole thing):
1. "Age-adjusted parental wealth, by itself, explains less than 10 percent of the variation in age-adjusted child wealth."
2. 20 percent of parents in the lowest quintile of the parent’s
wealth distribution have children who end up in the top two quintiles
of their generation. One-quarter of the parents in the highest wealth
quintile end up with kids in the two lowest quintiles.
3. The age-adjusted intergenerational wealth elasticity is 0.37.
What does this mean? If parents have wealth 50 percent over the mean in
their generation, the wealth of their children will be 18 percent above
the mean in the childrens’ generation.
That all said, I think there remains a very real disaggregated problem concerning income mobility. Given the rising size of the college earnings premium, many more people should be going to college but are not. Not every country in Europe has the same problem. Here is my previous column on that topic. Since I do not think there is a single unique bottleneck preceding higher education, and many of the issues are sociological, I do not think this problem will prove easy to fix.