Scandinavian Working Papers in Economics

Memorandum,
Oslo University, Department of Economics

No 34/2005: American exceptionalism in a new light: a comparison of intergenerational earnings mobility in the Nordic countries, the United Kingdom and the United States

Markus Jäntti (), Bernt Bratsberg (), Knut Røed (), Oddbjørn Raaum (), Robin Naylor (), Eva Österbacka (), Anders Bjørklund () and Tor Eriksson ()
Additional contact information
Markus Jäntti: Department of Economics and Statistics, Åbo Akademi University, Finland., Postal: Department of Economics and Statistics, Åbo Akademi University, FIN-20500 Turku, Finland.
Bernt Bratsberg: The Ragnar Frisch Centre for Economic Research, Postal: Frisch Centre, Gaustadalléen 21, N-0349 Oslo, Norway
Knut Røed: The Ragnar Frisch Centre for Economic Researc, Postal: Frisch Centre, Gaustadalléen 21, N-0349 Oslo, Norway
Oddbjørn Raaum: The Ragnar Frisch Centre for Economic Researc, Postal: Frisch Centre, Gaustadalléen 21, N-0349 Oslo, Norway
Robin Naylor: University of Warwick, Economics Department, Postal: University of Warwick, Coventry CV4 7AL, UK
Eva Österbacka: Åbo Akademi University,Department of Economics and Statistics, Postal: Fänriksgatan 3 B, FIN-20500 Turku, FINLAND
Anders Bjørklund: Swedish Institute for Social Research at Stockholm University, Postal: SE-10691 Stockholm, SWEDEN
Tor Eriksson: Aarhus School of Business, Department of Economics, Postal: Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Danmark

Abstract: We develop methods and employ similar sample restrictions to analyse differences in intergenerational earnings mobility across the United States, the United Kingdom, Denmark, Finland, Norway and Sweden. We examine earnings mobility among pairs of fathers and sons as well as fathers and daughters using both mobility matrices and regression and correlation coefficients. Our results suggest that all countries exhibit substantial earnings persistence across generations, but with statistically significant differences across countries. Mobility is lower in the U.S. than in the U.K., where it is lower again compared to the Nordic countries. Persistence is greatest in the tails of the distributions and tends to be particularly high in the upper tails: though in the U.S. this is reversed with a particularly high likelihood that sons of the poorest fathers will remain in the lowest earnings quintile. This is a challenge to the popular notion of ’American exceptionalism’. The U.S. also differs from the Nordic countries in its very low likelihood that sons of the highest earners will show downward ’long-distance’ mobility into the lowest earnings quintile. In this, the U.K. is more similar to the U.S..

Keywords: Intergenerational mobility; earnings inequality; long-run earnings

JEL-codes: C23; J62

44 pages, December 25, 2005

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