An alternative measure of intergenerational income mobility based on a random coefficient model

Abstract

SUMMARY We propose an alternative measure of the degree to which income status is transmitted from one generation to another. Our indicator of intergenerational income mobility is based on a random coefficient model, which allows for variation in intergenerational mobility across families due to multiplicative unobserved family‐specific characteristics. This alternative measure suggests that intergenerational income persistence is typically stronger than when intergenerational income mobility is measured using the standard elasticity of sons' income with respect to fathers' income. Copyright © 2011 John Wiley & Sons, Ltd.