Economic Approach to Intergenerational Mobility

This chapter provides an analytical survey and synthesis of economic literature on intergenerational mobility in developing countries, with a focus on data and methodological challenges. Sample truncation from co-residency and measurement error cause substantial downward bias in intergenerational regression coefficient, whereas intergenerational correlation and intergenerational rank correlation are more robust to such data limitations. To understand heterogeneity, reliable estimates of both the intercept and the slope are necessary. The OLS estimate of the intercept is biased upward, but less so in the rank–rank regression. Sibling correlation is a broader measure of mobility, especially convenient with limited data. Estimating intergenerational causal effects is challenging as it requires long panel data. A promising alternative is to focus on the causal effects of policies on measurement of relative and absolute mobility, without disentangling the role of genetic inheritance.