CHAPTER 9Intergenerational Mobility
From the moment I heard Billy Joel sing “It's nine o-clock on a Saturday,” I fell in love with his songs. I particularly love his song “Allentown” and the following lyrics:
Every child has a pretty good shot
To get at least as far as their old man got
But something happened on the way to that place
They threw an American flag in our face.
The point is that the American Dream has been based on the belief that each future generation will have a better life than the previous generation. The brilliant Harvard economist Raj Chetty has shown this dream is no longer grounded in reality. As shown by Chetty (see Chart 4 on www.brookings.edu/blog/social-mobility-memos/2018/01/11/raj-chetty-in-14-charts-big-findings-on-opportunity-and-mobility-we-should-know/), children born in 1940 had a 90% chance of earning more money (after adjusting for inflation) than their parents. After a steady decline, by 1980 the chance that a child's real income would exceed their parent's real income had dropped to 50%. This fact is an example of declining intergenerational mobility. Intergenerational mobility (IM) refers to how income and or social status changes for members of the same family between generations. In this chapter, we will discuss four techniques used to measure intergenerational mobility:
- Absolute intergenerational mobility
- Intergenerational elasticity (IGE)
- Rank-rank mobility
- Quintile studies of mobility
These techniques are tricky to explain and understand. ...
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