Less Equal and Less Mobile: Evidence of a Decline in Intergenerational Income Mobility in the United States

We identify a declining trend in the intergenerational mobility of men’s family income in the United States for sons aged 36-45 between 1997 and 2011, corresponding to fifteen successive rolling ten-year cohort-groups born between 1952 and 1975. Using PSID data to 2008, we first predict fathers’ and sons’ income at age forty within each cohort-group, as a proxy for lifetime income, and then regress sons’ lifetime income on their fathers’ income, in logarithmic form, within each group. This yields fifteen successive estimates of the intergenerational elasticity (IGE) of income, ranging from a low of 0.421 for sons aged 36-45 in 1997 through a high of 0.516 for 2007 to a final value of .483 for 2011, with a statistically significant annual slope of .0037. Intergenerational correlations and rank correlations similarly exhibit a significant rising trend in this period, as does the IGE of men’s earnings, all of which indicate declining intergenerational mobility. The Gini coefficient of sons’ lifetime income within these fifteen successive cohort-groups also increases, exhibiting a correlation of 0.71 with our IGE estimates and leading us to conclude that as the United States economy has become less equal in recent years it has also become less mobile.