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Department of Economics, University of Bergen Working Papers in Economics, Department of Economics, University of Bergen

No 01/15:
A comparison of intergenerational mobility curves in Germany, Norway, Sweden and the U.S.

Espen Bratberg (), Jonathan Davis (), Bhashkar Mazumder (), Martin Nybom (), Daniel Schnitzlein () and Kjell Vaage ()

Abstract: We use two non-parametric measures to characterize intergenerational mobility (IGM) throughout the income distribution: Rank Mobility and Income Share Mobility. We examine differences in these IGM curves between Germany, Norway, Sweden and the United States using comparable samples. Although we find that these curves are approximately linear through most of the income distribution, non-linearities are important in describing cross-country differences. The linear representations of these curves lead to different conclusions regarding cross-country differences depending on the measure. Using ranks, we find that the U.S. is substantially less intergenerationally mobile than the three European countries which have fairly similar degrees of rank mobility. Despite the substantial heterogeneity in intergenerational rank mobility within the U.S., we show that the most mobile region of the U.S. is still less mobile than the least mobile regions of Norway and Sweden. When we use a linear estimator of Income Share Mobility we find that the four countries have very similar rates of IGM. However, there are some notable cross-country differences at the bottom and the top of the income distribution for both types of mobility. For example, the U.S. tends to experience lower upward mobility at the very bottom of the income distribution according to both measures. We conclude that researchers should be careful in drawing conclusions regarding cross-country differences in intergenerational mobility given that the results may be sensitive to the concept being used and to non-linearities.

Keywords: rank mobility; income share mobility; cross-country differences; (follow links to similar papers)

JEL-Codes: I30; J62; (follow links to similar papers)

34 pages, April 15, 2015

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