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.