The Link between Family Background and Later Lifetime Income: How Does the UK Compare with Other Countries?

Abstract

The link between family background and labour market outcomes is an issue of great academic, social and political concern. It is frequently claimed that such intergenerational associations are stronger in Britain than in other countries. But is this really true? I investigate this issue by estimating the link between parental education and later lifetime income, using three cross-nationally comparable data sets covering more than 30 countries. My results suggest that the UK is broadly in the middle of the cross-country rankings, with intergenerational associations notably stronger than in Scandinavia but weaker than in eastern Europe. Overall, I find limited support for claims that family background is a greater barrier to economic success in Britain than in other parts of the developed world. Policy pointsr Previous work has offered conflicting messages regarding the strength of the association between the socio-economic circumstances of parents and children in the UK compared with other countries. I * Submitted April 2014. r The similarity of my findings across data sets and measures of socioeconomic background is striking. My results suggest that the UK sits in the middle of the cross-country rankings, with lower levels of mobility than a number of western countries -including Scandinavia, but also Australia, Canada and Germany -and higher levels of mobility than the United States and much of eastern Europe.r These results hold for offspring with average earnings. Comparing individuals who end up lower down the earnings distribution shows that the effect of parental socio-economic background is stronger in the UK than in most other countries, suggesting that higher socio-economic-status families in the UK are particularly good at preventing significant downward mobility for their children.

Evidence on intergenerational income transmission using complete Dutch population data

“…Overall the results imply approximately 20 percent of the income advantage of parents in the Netherlands is passed on to their children in adulthood, a much lower IGE compared with most previous estimates, although in line with Jerrim's (2017) finding that the Netherlands has a relatively low income gap between sons of more and less educated parents. The results enable us to accurately position the Netherlands on Krueger's (2012) "Great Gatsby Curve" which traces a positive relationship between inequality and the IGE of income.…”

Reframing the English grammar schools debate

“…The evidence suggests that the public perception of a crisis in UK social mobility is largely misplaced (Gorard 2008). The most recent international comparisons for inter-generational income mobility, for example, place the UK 19 th out of 37 countries (Jerrim 2015). Crisis accounts of mobility and linkage with the decline of grammar schools appear to be a product of media and public imagination rather than any evidence.…”

The persistent effect of socioeconomic status on education and labor market outcomes

“…Some studies find a negative relationship between the intergenerational elasticity and parental income (Eide and Showalter, 1999;Grawe, 2004;Bratsberg et al, 2005). However, there are a vast number of studies that find the opposite (Behrman and Taubman, 1990;Corak and Heisz, 1999;Schnitzlein, 2014;Raitano and Vona, 2015;Jerrim, 2016;among others). In general, the empirical studies that look at intergenerational mobility patterns across the earnings distribution do not strongly support a significant effect of short-run credit constraints on children's academic outcomes [2].…”