Jo Blanden
Cross-national rankings of
intergenerational mobility: a comparison of
approaches from economics and sociology
Article (Accepted version)
(Refereed)
Original citation:
Blanden, Jo (2013) Cross-national rankings of intergenerational mobility: a comparison of
approaches from economics and sociology. Journal of Economic Surveys, 27 (1). pp. 38-73.
ISSN 0950-0804
DOI: 10.1111/j.1467-6419.2011.00690.x
© 2011 Blackwell Publishing Ltd
This version available at: http://eprints.lse.ac.uk/59310/
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Cross-country rankings in intergenerational mobility: A comparison of
approaches from economics and sociology
Jo Blanden*
May 2008
Submitted November 2009– this revision January 2011
* Department of Economics, University of Surrey and
Centre for Economic Performance, London School of Economics
Abstract
This paper summarises research on the relative level of intergenerational mobility – whether
classified by income, education or social class. The literatures on education and income
mobility reveal a similar ranking with South America, other developing nations, southern
European countries and France tending to have rather limited mobility while the Nordic
countries exhibit strong mobility. Estimates of mobility based on social class point to rather
different patterns, and we demonstrate that these differences are most likely generated by
intergenerational earnings persistence within social classes. The second part of the paper
looks for explanations for the differences in earnings and education persistence and finds that
mobility is negatively correlated with inequality and the return to education but positively
correlated with a nation’s education spending.
Keywords: Intergenerational mobility, public policy, inequality, education
JEL Codes: J62, J68, D63
Acknowledgements
The author would like to thank Harry Ganzeboom, Richard Breen and Kevin Denny for
generously sharing their data. I am grateful to Cetin Salih for research assistance and to
Anders Björklund, Christopher Jencks, Paul Gregg, Robin Naylor, Nils Gottfries, Jouni Kuha
and two anonymous referees for extremely helpful comments. This paper is based on work
commissioned by the Sutton Trust and the Carnegie Corporation of New York for their June
2008 conference ‘Social Mobility and Education’. A version of this paper was previously
made available as Centre for the Economics of Education Discussion Paper No. 111 under
the title ‘How much can we learn from international comparisons of intergenerational
mobility?’
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1. Introduction
Intergenerational mobility is concerned with the relationship between the socio-economic
status of parents and the socio-economic outcomes of their children as adults. This can be
measured in a variety of ways, by family income, individual earnings, social class,
occupational status, or education. If most individuals’ socioeconomic outcomes are strongly
related to those of their parents, this means that children from a poor family are likely to be
relatively poor as adults and consequently that inequality will perpetuate. This has
implications for economic efficiency if the talents of those from poorer families are under-
developed or not fully utilized, as those from poorer backgrounds will not live up to their
productive potential.
Most people would agree that equality of opportunity is an important goal;
nonetheless it is difficult to imagine a world with no link between outcomes across
generations. Genetic transmission alone is likely to lead to some positive association between
the educational achievements, career prospects and earning power of parents and children,
while learning within the family will accentuate the advantages of children from better-off
families. Hence the policy implications of the study of intergenerational mobility are unclear.
If intergenerational income inequality is solely a consequence of the automatic transmissions
of ability and other attributes within the family, its reduction would require strong
intervention by the state, and might lead to inefficiency. Our understanding of this can be
improved by making comparisons of the levels of intergenerational mobility across countries.
With such comparisons in hand, it is possible to assess mobility as ‘relatively weak’ and
‘relatively strong’, and then to begin to consider potential explanations for differences in
intergenerational mobility.
The first objective of this paper is to summarise the literature on the relative strength
of intergenerational mobility across different countries. In contrast to most other summaries,
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work on earnings, education and social class will all be considered, with observations of
mobility included from 46 countries. The data requirements to measure the transmission of
income or earnings are very strict so estimates are only available for a limited number of
countries. In addition there is considerable uncertainty about country rankings for those
nations for which estimates are available (as highlighted in Björklund and Jäntti, 2009). For
both these reasons it is helpful to supplement the estimates on income and earnings with
those from the literatures on education and occupations.
We find that the results for earnings and education tend to be fairly well correlated;
this implies that information on educational mobility is a good proxy for earnings mobility in
countries where earnings information is not readily available. Combined, the results indicate
that South America and southern Europe have low mobility and the Nordic nations are rather
more mobile.
International rankings of the association of social class across generations (social class
fluidity) differ markedly from those for income and education. There are three possible
explanations for this. First, it could be that the true ranking is similar, but practical issues
mean that measured rankings differ; we discuss the reasons why this might be the case.
Secondly, it could be that social class and income/education are not well correlated; in this
case the different approaches can be seen as complementary as they are based on different
conceptual approaches. Finally, and most plausibly, (as suggested by the evidence) it could
be that although social class and income are related there is a large amount of persistence
within social classes for some nations, so that income matters for the life chances of the next
generation even for those with the same parental class. We demonstrate these relationships
using data from the US Panel Study of Income Dynamics (PSID) and the British 1970 birth
cohort.
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In the final part of the paper we begin with a short review of the theoretical literature
that seeks to model the determinants of intergenerational mobility within society. This
includes income inequality, educational investment, and returns to education. Finally we take
our preferred measures of mobility and correlate them with these variables. Earnings and
education mobility are negatively related both to economic inequality and the returns to
education but are positively related to education spending.
These descriptive correlations cannot be thought of as identifying the causal
relationships that drive intergenerational mobility. However, owing to the intense interest in
the relationship between inequality and immobility, it seems worthwhile to explore the extent
of our knowledge in this area. The conclusions attempt to answer to the question: ‘How
much can we learn from international comparisons of intergenerational mobility?’
2. Measures and Concepts
We begin by reviewing the key methodological issues that arise in obtaining estimates of
income and earnings mobility, an issue that has achieved substantial attention in recent years.
We then discuss the measures and concepts used when social status, class and education are
used as outcome measures.
2.1 Income Mobility
A central tenet of economics is that individual welfare is best achieved by providing
individuals with resources and allowing them to decide how to spend them. Friedman’s
(1957) permanent income hypothesis states that it is the permanent expectation of income
that determines consumption and ultimate economic welfare. For economists therefore, the
intergenerational relationship of interest is the relationship between parents’ permanent
income and childs’ permanent income. As is common we denote permanent variables by *
and logs by lower case variables.
