However, the relevant question is whether the observed increase in cross-sectional inequality is a natural outcome of efficient incentive structure in a liberalized and market oriented economy that rewards hard work and entrepreneurial risk taking, or it is primarily due to inequality of opportunity due to differential access, for example, to education and markets. The rise in cross-sectional inequality becomes a serious concern when it is primarily a result of inequality of opportunity, i.e., the inability of children born in poorer families and disadvantaged social groups to move beyond their parents‘ position in economic ladder by their own effort and choices.<sup>6</sup> An immobile society may require policies, public investments and reforms to ensure both efficiency and equality of opportunity.<sup>7</sup> Understanding the trends in and the levels and patterns of intergenerational mobility during the post liberalization period has thus become important for academics and policy makers (Bardhan (2010), Banerjee and Piketty (2005)).<sup>8</sup> This paper provides evidence on intergenerational economic mobility in India during the post liberalization period by focusing on the educational attainment of children. Education is used as an indicator of economic status in the absence of suitable data on permanent income.<sup>9</sup> There is a broad consensus in the literature that education is among the most important avenues for poor to escape from poverty traps and climb up the economic ladder (for recent surveys, see Orazem and King (2008), Strauss and Thomas (1995)). The role of education may be especially important in postreform India where growth has been concentrated in skill intensive sectors: the software industry and call centers being iconic examples (Kochhar et al. (2006), Bardhan (2010), Kotwal et al. (2011)).<sup>10</sup> The goal of this paper is to analyze the trends in and levels and patterns of educational mobility over

> guardian‘ of Sahara Group, $ 250,000 was spent on candles alone (Srivastava, S, BBC online, February 11, 2004)! The popular perception that rural areas in India have been largely left out of the recent economic growth is, at least partly, shaped by the reports of farmers‘ suicides, among other things.

> 6 Higher inequality of opportunity is likely to lead to a higher cross-sectional inequality (Atkinson (1981)).  Many observers believe that inequality in India reflects inequality in opportunity. For example, Basu (2008) comments that ―A certain amount of inequality may be essential to mitigate poverty....But the extent of Inequality in India seems to be well above that‖.

> 7 In an immobile society, many high ability children from poor families may not be able to go to school and thus fail to realize their productive potential. High inequality can also lead to political instability.

> 8 For a broader discussion on the importance of equity in economic opportunity for development, see Equity and Development (World Development Report (2006)).

> 9 Reliable data on children‘s and parents‘ income over the life cycle are not available in a developing country such as India.  As emphasized in the recent literature, one needs good quality income data over a number of years at appropriate phase of the lifecycle to tackle the attenuation bias in the estimated intergenerational correlation in income (Solon (1999), Mazumder (2003)). The analysis of intergenerational persistence in income in India is also complicated by the fact that a majority of population especially during parent‘s generation were engaged in family farming as self-employed workers making it difficult to attribute income to individual members.

> 10 This is in contrast to the Chinese experience where growth has been dominated by agriculture and labor intensive manufacturing. Bardhan (2010) and Datt and Ravallion (2010) emphasize low and unequal human capital as an important constraint on poverty reduction in India.

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