Skip to main content

Measuring the link between intergenerational occupational mobility and earnings: evidence from eight European countries

Abstract

This paper investigates the relationship between family background and earnings using relative social mobility to decompose residual background correlations, namely the effect of background on earnings left after controlling for background-related intervening factors. Using the European Union Statistics on Income and Living Conditions for 8 countries, we first show that country differences in terms of intergenerational inequality concern residual background correlations and then decompose these correlations using changes in relative social positions. In immobile countries, we find that significant residual correlations are mainly driven by penalisation of upward mobility in the UK (glass ceiling) and by an insurance against downward mobility in Spain and Italy (parachute). In mobile countries, insignificant residual correlations mask heterogeneous returns to social mobility. While our findings for Southern countries hardly concur with human capital theory, the widespread emergence of glass ceiling effects appears to be consistent with this theory.

This is a preview of subscription content, access via your institution.

References

  1. 1.

    Agnarsson, S., Carlin, P.: Family background and the estimated return to schooling: Swedish evidence. J. Hum. Resour. 37(3), 680–692 (2002)

    Article  Google Scholar 

  2. 2.

    Andrews, D., Leigh, A.: More inequality, less social mobility. Appl. Econ. Lett. 16, 1489–1492 (2009)

    Article  Google Scholar 

  3. 3.

    Becker, G., Tomes, N.: An equilibrium theory of the distribution of income and intergenerational mobility. J. Polit. Econ. 81 (1979)

  4. 4.

    Becker, G., Tomes, N.: Human capital and the rise and fall of families. J. Labor Econ. 4 (1986)

  5. 5.

    Benabou, R.: Equity and effectiveness in human capital investment: the local connection. Rev. Econ. Stud. 63, 37–64 (1996)

    Article  Google Scholar 

  6. 6.

    Bingley, P., Corak, M., Westergård-Nielsen, N.: The intergenerational transmission of employers in Canada and Denmark. IZA Discussion Paper (2011)

  7. 7.

    Björklund, A., Jännti, M., Solon, G.: Influences of nature and nurture on earnings variation: a report on a study of various sibling types in Sweden. In: Bowles, S., Gintis, H., Osborne Groves, M. (eds.). Unequal chances: family background and economic success. Russell Sage, New York (2005)

  8. 8.

    Bjorklund, A., Jäntti, M.: Intergenerational income mobility and the role of family background. In: Salverda, W., Nolan, B., Smeeding, T. (eds.): The Oxford handbook of economic inequality. Oxford University Press (2009)

  9. 9.

    Blanden, J.: Cross-country rankings in intergenerational mobility: a comparison of approaches from economics and sociology. J. Econ. Surv. 27(1), 38–73 (2013)

    Article  Google Scholar 

  10. 10.

    Blanden, J., Machin, S.: Educational inequality and the expansion of UK higher education. Scott. J. Polit. Econ. 51, 230–249 (2004)

    Article  Google Scholar 

  11. 11.

    Blanden, J., Gregg, P., MacMillan, L.: Accounting for intergenerational income persistence: noncognitive skills, ability and education. Econ. J. 117, C43—C60 (2007)

    Article  Google Scholar 

  12. 12.

    Blanden, J., Wilson, K., Haveman, R., Smeeding, T.: Understanding the mechanisms behind intergenerational persistence: a comparison of the United States and Great Britain. In: Smeeding, T., Erikson, R., Jantti, M. (eds.) Persistence, privilege and parenting, Russell Sage Foundation, New York (2011)

  13. 13.

    Bowles, S., Gintis, H.: The inheritance of inequality. J. Econ. Perspect. 16, 3–30 (2002)

    Article  Google Scholar 

  14. 14.

    Bratsberg, B., Røed, K., Raaum, O., Naylor, R., Jäntti, M., Eriksson, T., Österbacka, E.: Nonlinearities in intergenerational earnings mobility: consequences for cross-country comparisons. Econ. J. 117, C72–92 (2007)

    Article  Google Scholar 

  15. 15.

    Breen, R. (ed.).: Social mobility in Europe. Oxford University Press (2004)

  16. 16.

    Breen, R., Luijkx, R.: Social mobility in Europe between 1970 and 2000. In: Breen, R. (ed.) Social mobility in Europe. Oxford University Press (2004)

  17. 17.

    Checchi, D., Ichino, A., Rustichini, A.: More equal but less mobile?: Education financing and intergenerational mobility in Italy and in the US. J. Public Econ. 74 (3), 351–393 (1999)

    Article  Google Scholar 

  18. 18.

    Chevalier, A., Conlon, G.: Does it pay to attend a prestigious university? IZA Discussion Papers (2003)

  19. 19.

    Corak, M.: Inequality from generation to generation: the United States in comparison. In: Rycroft, R. (ed.): The economics of inequality, poverty, and discrimination in the 21st century. ABC-CLIO Publisher, Santa Barbara (2013)

  20. 20.

    Corak, M., Piraino, P.: The intergenerational transmission of employers. J. Labor Econ. 29(1), 37–68 (2011)

    Article  Google Scholar 

  21. 21.

    Cunha, F., Heckman, J.: The technology of skill formation. Am. Econ. Rev. 97(2), 31–47 (2007)

    Article  Google Scholar 

  22. 22.

    Dohmen, T., Falk, A., Huffman, D., Sunde, U.: The intergenerational transmission of risk and trust attitudes. Rev. Econ. Stud. 79(2), 645–677 (2012)

    Article  Google Scholar 

  23. 23.

    Erikson, R., Goldthorpe, J.H.: The constant flux: a study of class mobility in industrial societies. Oxford University Press, Oxford (1992)

    Google Scholar 

  24. 24.

    Esping-Andersen, G.: The three worlds of welfare capitalism. Princeton University Press (1990)

  25. 25.

    Ferrera, M.: The southern model of welfare in social Europe. J. Eur. Soc. Pol. 1 (1996)

  26. 26.

    Galor, O., Tsiddon, D.: The distribution of human capital and economic growth. J. Econ. Growth 2, 93-124 (1997)

    Article  Google Scholar 

  27. 27.

    Ganzeboom, H., De Graaf, P., Treiman, D.: A standard international socio-economic index of occupational status. Soc. Sci. Res. 21, 1–56 (1992)

    Article  Google Scholar 

  28. 28.

    Ganzeboom, H., Treiman, D.: Internationally comparable measures of occupational status for the 1988 international standard classification of occupations. Soc. Sci. Res. 25, 201–239 (1996)

    Article  Google Scholar 

  29. 29.

    Ganzeboom, H., Treiman, D.: Ascription and achievement in comparative perspective, Russell-Sage university working group on social inequality, University of California-Los Angeles (2007)

  30. 30.

    Ganzeboom, H., Treiman, D.: A New International Socio-Economic Index [ISEI] of Occupational Status for the International Standard Classification of Occupation 2008 [ISCO-08] with a Discussion of the New Classification”, unpublished paper (2012)

  31. 31.

    Goldthorpe, J., Jackson, M.: Education-based meritocracy: the obstacles to its realization. In: Lareau A., Conley D. (eds.) Social class: how does it work?,Russell Sage Foundation, New York (2008)

  32. 32.

    Granovetter, M.: Afterword. In: Granovetter, M. (ed.): Getting a job: a study of contacts and careers. Chicago University Press (1995)

  33. 33.

    Granovetter, M.: The impact of social structure on economic outcomes. J. Econ. Perspect. 19, 33–50 (2005)

    Article  Google Scholar 

  34. 34.

    Guell, M., Rodriguez-Mora, J., Telmer, C.: Intergenerational mobility and the informative content of surnames. CEPR Discussion Papers (2007)

  35. 35.

    Gurgand, M., Maurin, E.: A large scale experiment: wages and educational expansion in France, pp 2007–21. PSE Working Papers (2007)

  36. 36.

    Haider, S., Solon, G.: Life-cycle variation in the association between current and lifetime earnings. NBER Working Papers (2006)

  37. 37.

    Hertz, T., Jayasundera, T., Piraino, P., Selcuk, S., Smith, N., Veraschangina, A.: The inheritance of educational inequality: international comparisons and fifty-year trends. B.E. J. Econ. Anal. Policy 7 (2) (2007)

  38. 38.

    Holmlund, H., Lindahl, M., Plug, E.: The causal effect of parents’ schooling on children’s schooling: a comparison of estimation methods. J. Econ. Lit. 49(3), 615–51 (2011)

    Article  Google Scholar 

  39. 39.

    Hudson, J., Sessions, J.: Parental education, labour market experience and earnings: new wine in an old bottle? Econ. Lett. 113, 112–115 (2011)

    Article  Google Scholar 

  40. 40.

    Jencks, C., Tach, L.: Would equal opportunity mean more mobility? In: Morgan, S., Grusky, D., Fields, G. (eds.) Mobility and inequality: Frontiers of research in sociology and economics. Stanford University Press (2006)

  41. 41.

    Lam, D., Schoeni, R.: Effects of family background on earnings and returns to schooling: evidence from Brazil. J. Polit. Econ. 101(4), 710–40 (1993)

    Article  Google Scholar 

  42. 42.

    Machin, S.: Houses and schools: Valuation of school quality through the housing market. Labour Econ. 18(6), 723-729 (2011)

    Article  Google Scholar 

  43. 43.

    Osborne Groves, M.: Personality and the intergenerational transmission of economic status. In: Bowles, S., Gintis, H., Osborne Groves, M. (eds.). Unequal chances: family background and economic success. Russell Sage, New York (2005)

  44. 44.

    Pellizzari, M.: Do friends and relatives really help in getting a good job? Ind. Labor Relat. Rev. 63(3), 494–510 (2010)

    Google Scholar 

  45. 45.

    Pellizzari, M., Basso, G., Catania, A., Labartino, G., Malacrino, D., Monti, P.: Family ties in licensed professions in Italy, A report for the Fondazione Rodolfo Debenedetti, Milan (2011)

  46. 46.

    Raitano, M.: Intergenerational propagation of inequalities in Italy: education, occupation, earnings. Politica Economica 3, 345–374 (2011)

    Google Scholar 

  47. 47.

    Raitano, M., Vona, F.: Measuring the link between intergenerational occupational mobility and earnings: evidence from 8 European Countries. OFCE Working Paper, Rome (2011)

  48. 48.

    Raitano, M., Vona, F.: Direct and indirect influences of parental background on offspring earnings: a comparison across-countries and genders”, forthcoming in The Manchester School (2014)

  49. 49.

    Raitano, M., Vona, F.: From the cradle to the grave: the impact of family background on career path of Italian males”, paper presented at the Fifth ECINEQ Meeting, Bari (2013)

  50. 50.

    Sacerdote, B.: How large are the effects from changes in family environment? a study of Korean American Adoptees. Q. J. Econ. 122(1), 119–157 (2007)

    Article  Google Scholar 

  51. 51.

    Schuetz, G., Ursprung, H., Wößmann, L.: Education policy and equality of opportunity. Kyklos 61, 279–308 (2008)

    Article  Google Scholar 

  52. 52.

    Shavit, Y., Arum, R., Gamoran, A.: Stratification in higher education: a comparative study. Stanford University Press Stanford, California (2007)

    Google Scholar 

  53. 53.

    Solon, G.: A model of intergenerational mobility variation over time and place. In: Corak, M. (ed.) Generational income mobility in North America and Europe. Cambridge University Press (2004)

  54. 54.

    Whelan, C., Maitre, B.: Comparing poverty indicators in an enlarged European Union. Eur. Sociol. Rev. 26(6), 713–730 (2010)

  55. 55.

    Willis, R.: Wage determinants: a survey and reinterpretation of human capital earnings functions. In: Ashenfelter, O, Layard, R. (eds.): Handbook of labor economics, Vol. 1, pp 525-602. Elsevier, Amsterdam (1986)

    Chapter  Google Scholar 

Download references

Author information

Affiliations

Authors

Corresponding author

Correspondence to Francesco Vona.

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Raitano, M., Vona, F. Measuring the link between intergenerational occupational mobility and earnings: evidence from eight European countries. J Econ Inequal 13, 83–102 (2015). https://doi.org/10.1007/s10888-014-9286-7

Download citation

Keywords

  • Intergenerational inequality
  • Returns to intergenerational occupational mobility
  • International comparison
  • Relative social positions