Interpreting Trends in Intergenerational Mobility

Abstract

Studying a dynamic model of intergenerational transmission, we show that past events affect contemporaneous trends in intergenerational mobility. Structural changes may generate long-lasting mobility trends that can be nonmonotonic, and declining mobility may reflect past gains rather than a recent deterioration of equality of opportunity. We provide two applications. We first show that changes in the parent generation have partially offset the effect of rising skill premia on income mobility in the United States. We then show that a Swedish school reform reduced the transmission of inequalities in the directly affected generation but increased their persistence in the next.