Moving Towards Estimating Sons' Lifetime Intergenerational Economic Mobility in the UK
| Author | Claudia Vittori,Lindsey Macmillan,Paul Gregg |
| DOI | http://doi.org/10.1111/obes.12146 |
| Date | 01 February 2017 |
| Published date | 01 February 2017 |
79
©2016 TheAuthors. OxfordBulletin of Economics and Statistics published by Oxford University and John Wiley & Sons Ltd.
Thisis an open access article under the ter ms of the CreativeCommons Attribution License, which permits use, distribution and reproduction in any medium, provided
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Moving Towards Estimating Sons’ Lifetime
Intergenerational Economic Mobility in the UK*
Paul Gregg†, Lindsey Macmillan‡ and Claudia Vittori§
†Department of Social and Policy Sciences and Centre for the Analysis of Social Policy,
University of Bath, Claverton Down, Bath, North East Somerset BA2 7AY, UK (e-mail:
p.gregg@bath.ac.uk)
‡Department of Social Science,UCL Institute of Education, 20 Bedford Way, London,
WC1H 0AL, UK (l.macmillan@ucl.ac.uk)
§Department of Economics and Law, Sapienza University of Rome, Via del Castro
Laurenziano 9, 00161, Rome, Italy (claudia.vittori@uniroma1.it)
Abstract
Estimates of intergenerational economic mobility that use point in time measures of income
and earnings suffer from lifecycle and attenuation bias.They also suffer from sample selec-
tion issues and further bias driven by spells out of work.We consider these issues together
for UK data, the National Child Development Study and British Cohort Study, for the first
time. When all three biases are considered, our best estimate of lifetime intergenerational
economic persistence in the UK is 0.43 for children born in 1970. Whilst we argue that
this is the best available estimate to date, we discuss why there is good reason to believe
that this is still a lower bound, owing to residual attenuation bias.
I. Introduction
Over the last decade or so, there has been a major resurgence in research exploring the
extent of intergenerational persistence in inequalities. In the UK in particular, intergenera-
tional economic mobility has become a focus of extensive policy debates and government
initiatives. This renewed focus has been strongly influenced by emerging research find-
ings, with evidence suggesting that the level of mobility in the UK is low by international
standards (Blanden, 2013; Corak, 2013; Jerrim and Macmillan, 2015) and declined over
time (Blanden et al., 2004; Blanden, Gregg and Machin, 2005).1Black and Devereux
JEL Classification numbers: I20, J62, J24
*Weappreciate the comments from two reviewers who have helped to improvethis paper considerably. Wethank
participants at the seminars at CASE, University of Stirling, University of Bath and Labour and EducationWorkshop
at /University of Essex and the CMPO/SMCP Commission conference whereearlier versions of this paper have been
presented. We thank Jo Blanden and John Jerrim for their helpful comments on previous drafts.This research has
been funded under ESRC Grant ES/K005804/1.
1Social class mobility has remained constant overtime (Erikson and Goldthorpe, 2010). Differences across income
and class measures of mobility are likely driven by an increase in within-class inequality (Blanden, Gregg and
Macmillan, 2013).
OXFORD BULLETIN OF ECONOMICSAND STATISTICS, 79, 1 (2017) 0305–9049
doi: 10.1111/obes.12146
80 Bulletin
(2011) and J¨antti and Jenkins (2013) provide a recent review of this and related literatures
internationally.
Whilst the early literature on intergenerational mobility focused on the association be-
tween fathers’and sons’ earnings, recent studies have moved towards a family-based focus
concerning the association between parental resources in childhood and sons’ (and indeed
daughters’) adult economic outcomes (see J¨antti and Jenkins, 2013, for a full discussion).
There are two slightly different focuses here. One is to consider intergenerationalmobility
as the differences between lifetime incomes or earnings across two complete generations
of parents and children. The other assesses the extent to which a child’s adult outcomes
mirror their childhood circumstances. In this second setting, ideally the degree of inter-
generational mobility would be measured as the association between the socio-economic
status of parents throughout a person’s childhood and their lifetime earnings as an adult.
Both approaches are very data-intensive but the second less so. Indeed the former can-
not be realistically attempted without access to administrative register data linked across
generations which is unavailable in the UK. Our paper therefore attempts to estimate the
lifetime intergenerational economic mobility of a birth cohort of sons, focusing on the
childhood circumstances and adult destinations of children.
These intensive data requirements mean that the literature on intergenerational eco-
nomic mobility often approximates lifetime concepts with point in time measures or short
periods. This produces three substantive biases that have been addressed within this liter-
ature. The first two, attenuation bias and lifecycle bias, have received more attention and
have been shown to have significant impacts on the estimation of intergenerational persis-
tence when using point in time measures. Solon (1992) and Zimmerman (1992) noted the
existence of attenuation bias in estimates of intergenerational mobility driven by measure-
ment error and transitory variation in incomes measured at a point in time in the parents’
generation. The common approach to address this bias is to average over repeat measures
in the parents’ generation, moving towards a measure of full-childhood income (see e.g.
Mazumder, 2005).
An alternative, more problematic, approach has been to undertake a two stage process
where current income is regressed on parental characteristics, such as education and occu-
pation, which are predictors of longer-term income variation across families. This is used
by Dearden, Machin and Reed (1997) for the UK, who use the 1958 birth cohort with sons’
earnings measured at age 33 and suggest that attenuation bias is substantial enough to move
the estimated intergenerational elasticity (IGE) from 0.24 to the region of 0.55, although
the authors note that this is likely to be an upper bound. This approach has similarities
with the two-sample two-stage technique, whenf amily income or fathers’ earnings are un-
observed but other characteristics such as parental education and occupation are (Ermisch
and Nicoletti, 2007; Jerrim, Choi and Rodriguez, 2014).
Jenkins (1987) drew attention to the second issue of lifecycle bias, based on the gen-
eralized errors in variables model by exploring the relationship between point in time and
lifetime earnings. Haider and Solon (2006), Grawe (2006) and B¨ohlmark and Lindquist
(2006) explore this bias comparing current earnings with lifetime earnings and show that
the lifetime IGE can be consistently estimated by using earnings at a specific age where
the measurement error in current earnings is approximately classical. The specific age
is shown by B¨ohlmark and Lindquist (2006) to not be stable across gender, cohorts or
©2016 The Authors. Oxford Bulletin of Economics and Statistics published by Oxford University and JohnWiley & Sons Ltd.
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