Studies on economic inequality and social mobility reveal a strong connection between a parent’s economic status and their child’s outcomes. However, conventional methods may underestimate the influence of intergenerational dependence by up to 50-100%.
That’s the finding of new research from the University of Chicago, which found that social mobility between generations is lower than previously estimated, which may help explain persistent economic inequality.
Measuring inequality
The researchers refined measures of resources and well-being passed from parent to child, taking a more nuanced approach than previous research that relied heavily on income averages of fathers and sons.
To investigate, they analyzed data on the entire Danish population, including income, assets, liabilities, education, exam scores, number of children, and spending. By examining the adult population from 1980 to 2019, they were able to measure the lifetime resources of parents and children.
The researchers found that lifetime measures of intergenerational dependence showed that parents’ resources had a greater impact on their children’s economic outcomes than predicted by traditional measures. This suggests social mobility is lower than previous studies have indicated.
Realistic picture
The traditional method of analyzing parent-child income averages is inadequate in capturing an individual’s economic well-being throughout their life. The research found that changes in life, career, and education have resulted in differing income profiles among Danish people compared to previous generations. The timing of when parents can invest in their children’s development also plays a crucial role in a child’s lifetime prospects. The study highlights the need for a more comprehensive approach beyond income averages.
The study reveals that despite Denmark’s social support programs, intergenerational dependence remains strong and calls for more accurate measures of lifetime resources and investment in children’s crucial developmental years to improve social mobility and reduce inequality. It also shows that other factors like education, crime involvement, and the likelihood of teenage pregnancy may be tied to a person’s parents’ resources more than previously thought.
The researchers found that although intergenerational mobility is lower than previously estimated, today’s children, especially those from wealthy families, are still better off in absolute terms due to higher education and greater access to credit.
