Working Paper 2020-522
The two-stage approach to estimating intergenerational income mobility from panel data, proposed here, reduces age-related attenuation error and measurement error. The first stage estimates parents’ and children’s lifetime family income from linked longitudinal; the second stage uses these estimates to derive measures of absolute, relative and rank mobility. Applying this to United States PSID data, for sons born between 1952 and 1981 and their fathers, we find multiple indications of a decline in intergenerational mobility. This approach is robust to the addition of new data, and can be applied to improve the accuracy of mobility estimates derived from snapshot data.
Authors: Moshe Justman, Hadas Stiassnie.