The Decline in Intergenerational Mobility after 1980

Abstract

We demonstrate that relative intergenerational mobility declined sharply for cohorts born in the early 1960s compared to those born around 1950. The former entered the labor market largely after the rise in inequality that occurred around 1980 while the latter entered the labor market well before this inflection point. We show that the rank-rank slope rose from 0.25 to 0.36 and the intergenerational elasticity (IGE) increased from 0.28 to 0.45. We find that increases in the returns to schooling and in the gradient in the likelihood of marriage by parent income are likely contributors to increased intergenerational persistence.

Keywords: Intergenerational mobility, income, labor market

JEL Classification: E2, J61, J62