Estimation of intergenerational mobility in small samples: evidence from German survey data
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Estimation of intergenerational mobility in small samples: evidence from German survey data Iryna Kyzyma1 · Olaf Groh‑Samberg2 Accepted: 12 May 2020 © The Author(s) 2020
Abstract Using data from the German socio-economic panel, this paper provides new evidence on intergenerational mobility in Germany by focusing on intergenerational association in ranks—i.e. positions, which parents and children occupy in their respective income distributions. We find that the association of children’s ranks with ranks of their fathers is about 0.242 for individual labor earnings and it is higher for sons than for daughters. It is also higher in East Germany compared to West Germany. The results further show that rank-based measures of mobility are less sensitive than conventional measures of intergenerational income elasticity to different methodological and sample specification choices, such as the stages of the life cycle when incomes of children and parents are measured, the number of years for which incomes are considered, the treatment of zero values in income variables and the choice of annual versus hourly earnings. Moreover, they are more robust for sub-group comparisons of intergenerational mobility (e.g. across gender and region). This evidence suggests that, similarly to large administrative datasets, rank-based measures of intergenerational mobility perform better than elasticity-based measures in small samples based on survey data. Keywords Intergenerational income elasticity · Intergenerational mobility · Rank-based measures of mobility · Robustness · Small samples JEL classification D31 · D63 · J62
1 Introduction The extent to which economic outcomes of children are associated with economic outcomes of their parents has been widely studied in the literature (for an extensive overview see Solon 2002; Black and Devereux 2011; Jäntti and Jenkins 2015). This literature, however, focuses predominantly on elasticities of children’s income with respect to income of * Iryna Kyzyma [email protected] 1
Luxembourg Institute of Socio-Economic Research and IZA Bonn, 11 Porte des Sciences, 4366 Esch‑sur‑Alzette, Luxembourg
2
University of Bremen, Postfach 33 04 40, 28334 Bremen, Germany
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their parents whereas much less is known about intergenerational persistence in income ranks – i.e. positions which parents and children occupy in their income distributions. The available studies are relatively recent and so far cover only a restricted number of countries, such as Canada, the United States, or Nordic countries (see, among others, Dahl and DeLeire 2008; Chetty et al. 2014a, b; Mazumder 2016; Corak 2017; Heidrich 2017; Nybom and Stuhler 2017; Connolly et al. 2019). The evidence from these studies suggests that the estimates of intergenerational mobility based on ranks are less susceptible than intergenerational income elasticity estimates to attenuation and life cycle bias, rendering rank-based measures of mobility more appealing for studying intergenerational m
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