Intergenerational Earnings Mobility in Chile: The Tale of the Upper Tail

Abstract

This paper provides the first robust estimates of intergenerational mobility in Chile’s formal private sector using administrative data for parents and children. Using a unique dataset that links a child’s and their parent’s earnings, we estimate that the intergenerational earnings elasticity is between 0.275 and 0.312, whereas the rank- rank slope is between 0.249 and 0.268. In addition, we find significant nonlinearities in these measures, as intergenerational mobility is very high in the bottom 80% of the parents’ distribution and bottom 65% of the children’s distribution, but with remarkably high persistence in the upper part of the earnings distribution. We also document statistically significant heterogeneity by gender. Specifically, we find that the association between mothers’ and female children’s earnings is higher than for male children. In addition, persistence in poverty is higher for female children than for male children, upward mobility is higher for male children, persistence in privilege is higher for male children, and children’s intergenerational gender gap decreases as parental earnings increase. In particular, we find significant nonlinearities in the gender gap at the upper tail of fathers’ earnings distribution, suggesting that the gender dynamics of intergenerational mobility at the upper tail are different from the rest of the population.

Keywords: Intergenerational Mobility, Administrative Linked Data, Gender Heterogeneity.

JEL Classification: J31, J62