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Lecture 6

INTERGENERATIONAL INCOME MOBILITY IN THEORY

All three of these readings are important in understanding of how economists think about intergenerational mobility.

Your objective is to become familiar with the workhorse “structural” model. If you appreciate the causal drivers of intergenerational mobility, you will be able to interpret empirical estimates of the intergenerational elasticity, and to imagine identification strategies that will allow you as a researcher to uncover accurate estimates of these causal parameters. All of this underpins a fuller understanding of public policy, or at least an appreciation of the types of policies addressed to mobility, their justification and their design.

We will need our familiarity with theory to appreciate and hopefully interpret differences in intergenerational mobility both over time within a country, but also between them. Differences over time and space are topics that Lectures 7 and 8 will address.

A careful reading of the Becker-Tomes 1986 paper is the place to start, and then consider the Solon paper.

Download the Lecture 6 slides.

Becker, Gary S., and Nigel Tomes (1986). “Human Capital and the Rise and Fall of Families.” Journal of Labor Economics 4 (3): S1–39.

Becker, Gary S., and Nigel Tomes (1979). “An Equilibrium Theory of the Distribution of Income and Intergenerational Mobility.” Journal of Political Economy 87 (6): 1153–89.

Solon, Gary (2004). “A model of intergenerational mobility variation over time and place.” In Generational Income Mobility in North America and Europe, edited by Miles Corak. Cambridge ; New York: Cambridge University Press.

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