Working Paper: CEPR ID: DP13646
Authors: Giovanni L. Violante; Alberto Polo; Paolo Acciari
Abstract: We link administrative data on tax returns across two generations of Italians to study the degree of intergenerational mobility. We estimate that a child with parental income below the median is expected to belong to the 44th percentile of its own income distribution as an adult, and the probability of moving from the bottom to the top quintile of the income distribution within a generation is 0.10. The rank-rank correlation is 0.25, and rank persistence at the top is significantly higher than elsewhere in the income distribution. Upward mobility is higher for sons, first-born children, children of self-employed parents, and for those who migrate once adults. The data reveal large variation in child outcomes conditional on parental income rank. Part of this variation is explained by the location where the child grew up. Provinces in Northern Italy, the richest area of the country, display upward mobility levels 3-4 times as large as those in the South. This regional variation is strongly correlated with local labor market conditions, indicators of family instability, and school quality.
Keywords: intergenerational mobility; inequality; italy; geographical variation
JEL Codes: J31; J61; J62; R1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Parental income below the median (D31) | Child income at 44th percentile (J13) |
| Parental income (D31) | Child income ranks persistence (J13) |
| Top decile parental income (D31) | Child top decile probability (C46) |
| Bottom decile parental income (D31) | Child top decile probability (C46) |
| Sons (Y60) | Upward mobility (J62) |
| Firstborn children (J13) | Upward mobility (J62) |
| Self-employed parents (J22) | Upward mobility (J62) |
| Migration as adults (F22) | Upward mobility (J62) |
| Regional variation (R12) | Upward mobility (J62) |
| Local labor market conditions (J29) | Upward mobility (J62) |
| Family instability (J12) | Upward mobility (J62) |
| School quality (I21) | Upward mobility (J62) |
| Geographical differences (R12) | Mobility outcomes (J62) |
| Intergenerational elasticity of income (D15) | Mobility (J62) |