Becker Friedman Institute

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The Intergenerational Elasticity of What? The Case for Redefining the Workhorse Measure of Economic Mobility

The intergenerational elasticity (IGE) has been assumed to refer to the expectation of children’s income when in fact it pertains to the geometric mean of children’s income. We show that mobility analyses based on the conventional IGE have been widely misinterpreted, are subject to selection bias, and cannot disentangle the “channels” underlying intergenerational persistence. The solution to these problems — estimating the IGE of expected income or earnings — returns the field to what it has long meant to estimate. Under this approach, persistence is found to be substantially higher, thus raising the possibility that the field’s stock results are misleading.

Authors: 
Pablo Mitnik, Stanford University
David Grusky, Stanford University
Publication Date: 
July, 2018
Publication Status: 
Document Number: 
2018-043
File Description: 
First version, September, 2017