1. Intergenerational Poverty and Mobility

2. Intergenerational Mobility What do we mean by Intergenerational Income Mobility? Is it better to have higher or lower intergenerational income correlation?

3. Intergenerational Mobility Measuring Intergenerational Income Mobility (Solon 1992) ρ is the estimate of intergenerational income correlation between son’s income (y 1 ) and their father’s (y 0 ). If ρ is close to zero what would that mean? How about one?

4. Intergenerational Mobility Father’s income Son’s income

5. Intergenerational Mobility Measuring Intergenerational Income Mobility (Solon 1992) Was often estimated to be 0.2 or less. This should be easy to do right? What does Solon say are problems with previous studies?

6. Intergenerational Mobility 1. Measurement error in key variables. We can’t observe what we want to see, which is “permanent income” Rather, we see some indicator of “permanent income” (e.g., income in one year) (son i’s income in year s) (father i’s income in year s) Measurement error in “permanent income” will bias our estimates toward zero. Why? Mathematically? Intuitively?

7. Intergenerational Mobility Father’s income Son’s income

8. Intergenerational Mobility Father’s income Son’s income

9. Intergenerational Mobility Father’s income Son’s income

10. Intergenerational Mobility 2. Overly homogeneous samples These studies have often been run on strange samples due to data constraints (fathers included only twins who served in armed forces, or Wisconsin high school grads who did not go to graduate school). Why might this cause trouble? Mathematically? Intuitively?

11. Intergenerational Mobility Father’s income Son’s income

12. Intergenerational Mobility Father’s income Son’s income

13. Intergenerational Mobility Father’s income Son’s income

14. Intergenerational Mobility How does Solon attempt to overcome these issues? Sample Homogeneity? Measurement error in key variables?

15. Intergenerational Mobility

16. So Intergenerational income mobility appears to be well above 0.4 rather than 0.2, how would we interpret this? Is it a big deal? Under some assumptions, we can do some calculations Consider a son born to a father in the fifth income percentile (i.e., poor) If ρ is 0.2: Likelihood of staying in bottom quintile = 0.30 Likelihood of rising above the median = 0.37 Likelihood of rising to top quintile = 0.12 If ρ is 0.4: Likelihood of staying in bottom quintile = 0.49 Likelihood of rising above the median = 0.17 Likelihood of rising to top quintile = 0.05

17. Intergenerational Mobility What issue might be missing in Solon’s study?

18. Intergenerational Mobility Leblanc’s Random Family How does this excerpt relate to what we have been talking about? Where does this family’s poverty stem from? Lack of money? Where and how might one intervene as a social worker or as a policy maker?