Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698057894109.pdf (Liberia)
Intergenerational Social Mobility in European OECD countries OECD Economics Department Brussels November 30 Intergenerational Social Mobility • Paper part of a project aiming at analyzing patterns of intergenerational social mobility across OECD countries.

• More broadly the project aimed at analysing the role of public policies in enhancing mobility with a particular focus on education.

• Today focus on cross-country patterns in mobility.
Intergenerational Social Mobility • Challenge to measuring social mobility  many different measures hampered by the lack of comparable data, especially from a cross-country comparative perspective.

• Economists usually focus on earnings/income while sociologists on occupation/social class.

• Study focused on wage and educational mobility.


• Review of existing findings: Empirical studies tend to find that persistence –usually measured by the intergenerational income elasticity-- is relatively high in the Usa, UK and lower in the Nordics and Canada (e.g.

Corak, 2006; d’Addio, 2007).


3 Persistence in income in selected OECD countries Intergenerational Income Elasticity, selected studies Source: D’Addio 2007 Caveat: different studies, methods, time periods… 4 Intergenerational Social Mobility • This project used 2 sources of data: PISA and EU-Silc to assess social mobility.

Today focus on the findings from EU-Silc.


• Provide comparable estimates of intergenerational wage and education persistence across 14 European OECD countries based on harmonized micro data.

• Assess the role of education in intergenerational wage mobility.

5 Data and estimation approach  Data: EU-SILC and its special 2005 poverty module  contains retrospective information on family background when the respondent was a teenager.
 Retrospective information: parental education level, occupation, labour market status but not earnings  father’s level of education is used as a proxy for parental background Advantage  difficult to measure permanent income of parents education is a more permanent feature and correlated with earnings.

Disadvantage  education may not fully reflect earnings in some countries (e.g.

those with flat wage schedules)  Coverage: European OECD countries, 3 cohorts of men and women (25-34, 35-44, 45-54).
Focus on the middle cohort to limit life-cycle measurement problems.

6 Estimation approach 1.

In a first step estimate “persistence” in wages by: where lnWi is log gross hourly wage, Ei is the highest level of education attainment of the child’s father (3 categories), Xi is a set of individual characteristics affecting wages (urban/rural area, migrant, married/cohabitant, family-structure, number of siblings).

2.
2.

In the second step the child’s own educational attainment ECi is introduced to capture the influence of education on the wage persistence.

• Estimate separate equations for men and women by cohort and by country • Heckman's sample selection bias correction procedure is used for women, while OLS is used for men.

• Endogeneity problem with respect to own education: there is no easy solution to this identification issue because of the difficulty of finding appropriate instruments (e.g.

Card, 2001).
7 2lniiiiiXfECeEdW1lniiiiXcEbaW Estimation approach: interpretation • Interpretation of b : change in hourly wages associated with moving across categories of fathers’ education where upper- secondary (medium) education is the reference – Tertiary (high) relative to upper-secondary (medium) = wage premium – Below upper-secondary (low) relative to upper-secondary (medium) = wage penalty • The impact of parental background on individual outcomes combines the joint impact of “nature” and “nurture” – But there is no reason to believe that genetic inheritability varies systematically across countries: this paper adopts a comparative approach by analyzing to what extent estimates of equations differ across countries.
8 Estimation approach 3.

In the third step the child’s educational attainment ECi is related to that of her/his father’s Ei: • Estimate an ordered probit of educational attainment of the child (3 categories of education), by cohort and country.

• Explanatory variables: parental educational, individual characteristics Xi, i.e.

those in the wage regressions plus factors influencing educational choice at the time when the individual was a teenager (e.g.
number of siblings and dual or single parent family status).

Interpretation: the change in the probability to achieve a certain level of education depending on father’s education attainment.

• 9 3iiiiXjEhgEC 1.

Parental education influences individuals’ wages The wage premium and penalty of having a father with high or low education relative to having a father with medium education.
Men 35-44 * Significant at least at 10% 10 Summary measure of wage persistence Mobility measured by the gap between the wage premium and penalty: Men 35-44 years old.

2.

The role of education for wage persistence • Next step is to control for own education in the earnings equation (equation 2).

• Parental background (education) is in most cases not significant anymore education is a strong driver of wages/wage persistence.

The finding is even stronger for women.


• But, in some countries, the direct impact of parental education, controlling for own education, remains significant: Portugal, UK, Spain, Italy..  social networks or norms.

• Systematic pattern: Insignificans stem from a reduced coefficient on parental background rather than an increase in standard errors.

12 2.
12 2.

Controlling for own education: Parental education and wages The wage premium and penalty of having a father with high or low education relative to having a father with medium education.

Men 35-44 years old.

* Significant at least at 10% 13 3.

Intergenerational education persistence • Third step: Education appears to be one important determinant of wages/wage persistence.
• Estimate the probability to achieve a certain level of education depending on father’s educational attainment • Estimates shows that there is persistence in education across generations tertiary and below-secondary education 14 Parental education influences individuals’ tertiary educational achievement Change in the probability of achieving tertiary education of having a high or low educated father relative to a medium educated father; 35-44 years old 15 Summary measure of persistence in tertiary education 16 Parental education also influences below-upper secondary educational achievement Change in the probability of achieving below-upper secondary education of having a high or low educated father relative to a medium educated father; 35-44 years old.
17 Summary measure of persistence in below secondary education 18 Summary of findings • There appears to be persistence in wages and in education across generations, although to varying extent, across European OECD countries.

• One pattern: one group of countries that appear to be relatively immobile on most indicators (southern Europeans and Luxembourg) and another group which tend to be more mobile (e.g Nordics).
• But not necessarily same picture: UK seems to be less mobile in terms of wage persistence than in terms of education persistence, while the reverse is the case in Ireland.

19 Summary of findings • Also appears to be a relatively large premium in achieving tertiary education associated with having a highly educated parent while the penalty of having a low educated parent is fairly low (e.g.

Denmark and Finland), and the reverse is true in some other countries (e.g.

Sweden and Greece).
Sweden and Greece).

• Nature of intergenerational social mobility is complex challenge to measure  Several different measures of mobility as no single indicator gives the full picture, and they may not necessarily give the same picture.

20 Report available: Going for Growth 2010: http://www.oecd.org/document/24/0,3343,en_2649_3411 7_41665624_1_1_1_1,00.html Working papers: http://www.oecd.org/document/39/0,3343,en_2649_337 33_38306343_1_1_1_1,00.html 21