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A Lifecycle Estimator of Intergenerational Income Mobility

Úrsula Mello¹; Martin Nybom²; Jan Stuhler³

¹ Insper Institute of Education and Research, Institute for Economic Analysis and IZA · ² IFAU and UCLS · ³ Department of Economics, Universidad Carlos III de Madrid

Abstract Lacking lifetime income data, most intergenerational mobility estimates are subject to lifecycle bias. Using long income series from Sweden and the US, we illustrate that standard correction methods struggle to account for one important property of income processes: children from affluent families experience faster income growth, even conditional on their own characteristics. We propose a lifecycle estimator that captures this pattern and performs well across different settings. We apply the estimator to study mobility trends, including for recent cohorts that could not be considered in prior work. Despite rising income inequality, intergenerational mobility remained largely stable in both countries.

DOI

10.1162/rest_a_01585

Pages

1-44

Language

en

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