One size doesn’t fit all: a quantile analysis of intergenerational income mobility in the U.S. (1980–2010)

Abstract

Conventional wisdom and previous literature suggest that economic mobility is lower at the tails of the income distribution. However, the few studies that have estimated intergenerational income elasticity (IGE) at different points of the distribution in the U.S. were limited by small samples, arrived at disparate results, and had not estimated the trend of elasticity over time. Using the PSID database, a large sample of income observations in the 1980–2010 period for the U.S. is built, which allows us to obtain robust quantile estimates of the IGE both for the pooled sample and for each wave. For the pooled sample, the IGE shows a U-shaped relation with the income distribution, with higher values at the tails (0.64 at the tenth percentile and 0.48 at the ninety-fifth percentile) and a minimum value –highest mobility- of 0.38 at the seventieth percentile. The trend evolution of the IGE also varies across the income distribution: at the lower and mid quantiles, income mobility increased during the 80s and 90s but declined in the 00s, while for the higher quantiles it remained relatively stable along the whole period. Finally, the impact of education and race on mobility is evaluated. Both factors are found to be important and related to the position at the income distribution.

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Acknowledgements

We are grateful to two anonymous referees for excellent suggestions that contributed to significantly improve the paper. We would also like to thank Nicole Fortin, Roger Koenker and Joao Santos Silva for valuable technical advice and the participants at the 6th ECINEQ Meeting in Luxembourg for helpful comments. The authors acknowledge the financial support of the Ministerio de Economía y Competitividad of Spain, Palomino and Rodriguez through project ECO2016-76506-C4-1-R and Marrero through project ECO2016-76818-C3-2, and from Comunidad de Madrid (Spain) under project S2015/HUM-3416-DEPOPORCM, and Fundación Caja Canarias (Spain) under project CSOCTRA07. The usual disclaimer applies.

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Correspondence to Juan C. Palomino.

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Palomino, J.C., Marrero, G.A. & Rodríguez, J.G. One size doesn’t fit all: a quantile analysis of intergenerational income mobility in the U.S. (1980–2010). J Econ Inequal 16, 347–367 (2018). https://doi.org/10.1007/s10888-017-9372-8

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Keywords

  • Intergenerational mobility
  • Income elasticity
  • Quantile regression