Two-Sample Nonparametric Estimation of Intergenerational Income Mobility

Abstract

We estimate intergenerational income mobility in the USA and Sweden. To measure the degree to which income status is transmitted from one generation to another we propose a nonparametric estimator, which is particularly relevant for cross-country comparisons. Our approach allows intergenerational mobility to vary across observable family characteristics. Furthermore, it ts situations when data on fathers and sons come from di fferent samples. Finally, our estimator is consistent in the presence of measurement error in fathers' long-run economic status. We fi nd that family background captured by fathers' education matters for intergenerational income persistence in the USA more than in Sweden suggesting that the character of inequality in the two countries is rather di fferent.