Multigenerational mobility and long-run inequality

This seminar reframes multigenerational mobility and and provides a framework for assessing its long-run distributional consequences.
About this Event

Part of the Inequalities Seminar Series

Speakers:
Professor Ravi Kanbur , T.H. Lee Professor of World Affairs, International Professor of Applied Economics, and Professor of Economics, Cornell University & Visiting Professor, LSE III
Dr Yonatan Berman, Senior Lecturer in Economics, Department of Political Economy, King's College London & Visiting Fellow, LSE III

Intergenerational mobility is typically summarized by a parent-child elasticity, but this two-generation statistic is insufficient to characterize the long-run transmission of economic advantage. We propose a parsimonious extension of the canonical AR(1) model that adds a permanent lineage component and, more broadly, a new criterion for evaluating mobility models: whether they predict inequality and persistence in generations not used for estimation.

Using linked US censuses from 1850 to 1940, we construct millions of father-son pairs spanning up to five generations. Standard autoregressive models fit short-run mobility patterns but imply that dynastic persistence should largely disappear and substantially underpredict the subsequent rise in occupational-score inequality. In contrast, the lineage-effects model closely reproduces both the persistence of occupational status and the Gini observed in 1920 and 1940 out of sample. The distinction is economically consequential: persistent differences across lineages are substantially more important for long-run inequality and immobility than the conventional parent-child elasticity. Our results reframe multigenerational mobility as primarily a problem of persistent heterogeneity across lineages, and provide a framework for assessing the long-run distributional consequences of inherited advantage.

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