Generalized Intergenerational Mobility Regressions

Current research on intergenerational mobility (IGM) is informed by statistical approaches based on log-level regressions, whose economic interpretations remain largely unknown. We reveal the subjective value-judgments in them: they are represented by weighted-sums (or aggregators) over heterogeneous groups, with controversial economic properties. Log-level regressions tend to overrepresent the experiences of middle-class children while underrepresenting those from disadvantaged families. We propose a general construction of IGM measures that can incorporate any transparent economic preferences. They are interpreted as the marginal effect of parental normalized social welfare on children’s normalized welfare. Conventional regressions are special cases with implicit economic preferences that fail inequality-aversion and the Pigou–Dalton principle of transfers. Empirically, a variety of economic preferences, with varying inequality aversion, demonstrate a nuanced view of mobility, and perspectives on geographic-differences and dynamics of it.