A Theory of Intergenerational Mobility

20 Pages Posted: 1 Sep 2015 Last revised: 22 Mar 2018

Gary S. Becker

University of Chicago - Department of Economics; University of Chicago - Booth School of Business

Scott Duke Kominers

Harvard University

Kevin M. Murphy

University of Chicago; National Bureau of Economic Research (NBER)

Jörg L. Spenkuch

Northwestern University - Department of Managerial Economics and Decision Sciences (MEDS)

Date Written: March 18, 2018

Abstract

We study the link between market forces, cross-sectional inequality, and intergenerational mobility. Emphasizing complementarities in the production of human capital, we show that wealthy parents invest, on average, more in their offspring than poorer ones. As a result, economic status persists across generations even in a world with perfect capital markets and absent differences in innate ability. In fact, under certain conditions, successive generations of the same family may cease to regress towards the mean. We also consider how short- and long-run mobility are affected by changes in the returns to human capital.

Keywords: intergenerational mobility, inequality, human capital, complementarities

JEL Classification: J01, D10, D31

Suggested Citation

Becker, Gary S. and Kominers, Scott Duke and Murphy, Kevin M. and Spenkuch, Jörg L., A Theory of Intergenerational Mobility (March 18, 2018). Available at SSRN: https://ssrn.com/abstract=2652891 or http://dx.doi.org/10.2139/ssrn.2652891

Gary S. Becker

University of Chicago - Department of Economics ( email )

1126 East 59th Street
Chicago, IL 60637
United States

University of Chicago - Booth School of Business

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Scott Duke Kominers

Harvard University ( email )

Rock Center
Harvard Business School
Boston, MA 02163
United States

HOME PAGE: http://www.scottkom.com/

Kevin M. Murphy

University of Chicago ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-7280 (Phone)
773-702-2699 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jörg L. Spenkuch (Contact Author)

Northwestern University - Department of Managerial Economics and Decision Sciences (MEDS) ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

HOME PAGE: http://kellogg.northwestern.edu/faculty/spenkuch/

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