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  5. Measuring Intergenerational Income Mobility: A Synthesis of Approaches

Journal of Economic Literature

ISSN 0022-0515 (Print) | ISSN 2328-8175 (Online)

Measuring Intergenerational Income Mobility: A Synthesis of Approaches

  • Nathan Deutscher
  • Bhashkar Mazumder
Journal of Economic Literature
vol. 61, no. 3, September 2023
(pp. 988–1036)
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Abstract

The literature on intergenerational income mobility uses a diverse set of measures and there is limited knowledge about whether these measures provide similar information and yield similar conclusions. We provide a framework to highlight the key concepts and properties of the different estimators. We then show how these measures relate to one another empirically. Our main analysis uses income tax data from Australia to produce a comprehensive set of empirical estimates for each of 19 different mobility measures at both the national and regional levels. We supplement this analysis with other data that uses either within- or between-country variation in mobility measures. A key finding is that there is a clear distinction between relative and absolute measures both conceptually and empirically. A region may be high with respect to absolute mobility but could be low with respect to relative mobility. However, within broad categories, the different mobility measures tend to be highly correlated. For rank-based estimators, we highlight the importance of how the choice of the distribution used for calculating ranks can play a critical role in determining its properties as well as affect empirical findings. These patterns of results are important for policymakers whose local economy might fare well according to some mobility indicators but not others.

Citation

Deutscher, Nathan, and Bhashkar Mazumder. 2023. "Measuring Intergenerational Income Mobility: A Synthesis of Approaches." Journal of Economic Literature, 61 (3): 988–1036. DOI: 10.1257/jel.20211413

Additional Materials

JEL Classification

  • D31 Personal Income, Wealth, and Their Distributions
  • H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
  • I32 Measurement and Analysis of Poverty
  • J62 Job, Occupational, and Intergenerational Mobility; Promotion