Intergenerational Mobility in the US: What We Have Learned from the PSID

Abstract

This article reviews the contributions of the Panel Study of Income Dynamics (PSID) to the study of intergenerational mobility. As the longest running longitudinal household survey in the world, the PSID is ideally suited for studying intergenerational issues. The ability to track individuals as they form new households along with the broad coverage of many dimensions of socioeconomic status over large portions of the lifecycle, make it especially ideal for studying intergenerational mobility. I highlight how the economics literature has utilized these key aspects of the data to substantially contribute to the modern view of the U.S. as among the least economically mobile countries among advanced economies. Even with the emergence of “big data” and administrative data sources, the PSID remains a vital source for studying intergenerational mobility because of the richness of the questions and its long panel length. I review a recent example where a highly influential study of intergenerational mobility by Chetty et al (2014) using IRS data overstates intergenerational mobility in the U.S. because of the short panel length of the tax data used in their study. The PSID has also been instrumental in contributing to our understanding of many other dimensions of intergenerational mobility including: occupation; wealth; education; consumption; health; and group differences in mobility by gender, race and region. Finally, studies using the PSID have cast light on the mechanisms behind intergenerational persistence and how persistence has changed over time.