A New Look at Intergenerational Mobility in Germany Compared to the U.S

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in SOEPpapers on Multidisciplinary Panel Data Research at DIW BerlinThis series presents research findings based either directly on data from the German SocioEconomic Panel Study (SOEP) or using SOEP data as part of an internationally comparable data set (e.g. CNEF, ECHP, LIS, LWS, CHER/PACO). SOEP is a truly multidisciplinary household panel study covering a wide range of social and behavioral sciences: economics, sociology, psychology, survey methodology, econometrics and applied statistics, educational science, political science, public health, behavioral genetics, demography, geography, and sport science.The decision to publish a submission in SOEPpapers is made by a board of editors chosen by the DIW Berlin to represent the wide range of disciplines covered by SOEP. There is no external referee process and papers are either accepted or rejected without revision. Papers appear in this series as works in progress and may also appear elsewhere. They often represent preliminary studies and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be requested from the author directly.Any opinions expressed in this series are those of the author(s) and not those of DIW Berlin.Research disseminated by DIW Berlin may include views on public policy issues, but the institute itself takes no institutional policy positions. AbstractMotivated by contradictory evidence on intergenerational mobility in Germany, I present a cross-country comparison of Germany and the US, reassessing the question of whether intergenerational mobility is higher in Germany than the US. I can reproduce the standard result from the literature, which states that the German intergenerational elasticity estimates are lower than those for the US. However, based on highly comparable data, even a reasonable degree of variation in the sampling rules leads to similar estimates in both countries. I find no evidence for nonlinearities along the fathers' earnings distribution. In contrast, the analysis shows that mobility is higher for the sons at the lowest quartile of the sons' earnings distribution in both countries. In Germany this result is mainly driven by a high downward mobility of sons with fathers in the upper middle part of the earnings distribution. The corresponding pattern is clearly less pronounced in the US.

Intergenerational income mobility: access to top jobs, the low-pay no-pay cycle and the role of education in a common framework

“…This is in contrast to what has been found in previous studies of other countries using standard CQR (Bratsberg et al (2005) for Norway, Eide and Showalter (1999) and Palomino et al (2018) for the USA and Grawe (2004) for Canada). Our findings are, however, in line with recent studies from Björklund et al (2012) for Sweden and Schnitzlein (2016) for Germany and the USA. Given the sensitivity of estimates of the IGE across the distribution to the age the son is observed, we focus on a lifetime estimate of IGE, considering average earnings across the observed part of the lifecycle from ages 26 to 42.…”

“…These findings are in contrast to studies from the USA, Norway and Canada that find a decreasing intergenerational relationship as they move up the earnings distribution based on the problematic, in this context, conditional quantile regression technique. They are however consistent with literature in the UK about the strong role of family background in access to and progression within top jobs (Macmillan 2009;Macmillan et al 2015;Laurison and Friedman 2016), persistence in jobless spells across generations (Macmillan 2014;Gregg et al 2018) and patterns of IGEs across sons' earnings from Björklund et al (2012) for Sweden and Schnitzlein (2016) for both Germany and the USA.…”

“…While many existing studies find that the association with childhood circumstance is declining across the distribution of earnings in the USA, Norway and Canada (Eide and Showalter 1999;Bratsberg et al 2005; or broadly flat in the USA in Grawe (2004)), Björklund et al (2012) find a much larger intergenerational association for top earnings and incomes compared to the mean IGE in Sweden. Recent studies for Germany and the USA also suggest higher intergenerational persistence at the top of the earnings distribution compared to the middle (Schnitzlein 2016;Palomino et al 2018). Our findings are more in line with these recent studies with the association between earnings and childhood parental income strongest for the highest earning sons: family background becomes an increasing predictor of success, the more successful you are in the UK.…”

“…Bratsberg et al (2005) and Grawe (2004) demonstrate similar findings for Norway and Canada. Recent papers by Palomino et al (2018) and Schnitzlein (2016) use both conditional and unconditional quantile regression techniques for the USA and Germany and have findings more in line with ours. Palomino et al (2018) find a U-shaped relationship for the importance of family background across the distribution of sons' earnings while Schnitzlein (2016) finds more intergenerational persistence at the 75th percentile of the offspring's distribution in Germany and the USA (although does not explore further into the tails).…”

Reinforcing at the Top or Compensating at the Bottom? Family Background and Academic Performance in Germany, Norway, and the United States

“…The Importance of Family Background for Low, Middle, and High Academic Performance Although previous research on the intergenerational transmission of educational advantage has neglected that the relationship between parental and children's education may vary for children with different levels of academic performance, studies from economics have found intergenerational income mobility to vary across the distribution of offspring's income (Eide and Showalter 1999;Grawe 2004;Raitano, Vittori, and Vona 2016;Schnitzlein 2016). Similar nonlinearities may exist in educational mobility.…”