Ratio Working Paper No. 325: The American Dream Lives in Sweden: Trends in intergenerational absolute income mobility

PublikationWorking paper
Absolute mobility, Erik Liss, income decomposition, intergenerational income mobility, Karl Wennberg, Martin Korpi, social mobility

Sammanfattning

Despite a sizeable literature on relative income mobility across generations, there is a dearth of studies of absolute mobility across generations, i.e. whether current generations earn more or less than their parents did at the same age, as well as how to explain the level of absolute mobility. We use individual micro data to study the trend in intergenerational absolute income mobility measured as the share of sons and daughters earning more than their fathers and mothers, respectively, for eleven Swedish birth cohorts between 1970 and 1980. We find that absolute mobility in Sweden significantly exceeds that of the United States and is largely on par with Canada. The rate of absolute mobility for women exceeds that of men throughout the study period, however the trend has been stronger for men. Using an augmented decomposition model which supplements standard models by accounting for differences in the income distribution of every birth cohort’s parent generation, we find that heterogeneity in the parent income distribution strongly determines how much economic growth contributes to absolute mobility across birth cohorts. If income inequality is high in the parent generation, more growth is required if children that move downward in the relative income distribution are to earn more than their parents.

Liss, E., Korpi, M. & Wennberg, K. (2019). The American Dream Lives in Sweden: Trends in Intergenerational Absolute Income Mobility. Working Paper no. 325. Stockholm: Ratio.


Liknande innehåll

Does local government corruption inhibit entrepreneurship?
Artikel (med peer review)Publikation
Wittberg, E., Erlingsson, G. Ó., Wennberg, K.
Publiceringsår

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Small Business Economics, 62(2), 775-806

Sammanfattning

The dominant ‘sand in the wheels’ view holds that entrepreneurship is strongly inhibited by corruption. Challenging this, the ‘grease the wheels’ view maintains that corruption might increase entrepreneurship in highly regulated economies. We extend the basic predictions of these theories by examining entrepreneurs’ start-up decisions, as well as their location choices, in a seemingly low-corruption environment: Swedish municipalities. Combining a validated index of corruption perceptions in local government with population data on new entrepreneurs, nested logit models reveal that even in a low-corruption setting such as Sweden, perceptions of corruption can deter latent entrepreneurs. We also find that a minority of entrepreneurs relocate from their home municipalities to establish their start-ups elsewhere. Surprisingly and contrary to expectations, these relocating entrepreneurs often relocate from relatively low-corruption municipalities to others that are more corrupt. Implications for future research and public policy are discussed.

The Taller the Ladder, the Tougher the Climb?: Essays on the Impact of Income Inequality on Intergenerational Mobility
BokPublikation
Liss, E.
Publiceringsår

2024

Publicerat i

Linköping University Electronic Press.

Sammanfattning

The study of income inequality has a rich history within economics and various social sciences. More recently, a growing body of literature has examined intergenerational income mobility to understand not only equality of opportunities but also whether the labor market allocation successfully utilizes the potential abilities from all social strata. This dissertation explores the intricate relationship between income inequality and intergenerational mobility through three distinct research articles.

If we envision the income distribution as a ladder, income inequality can be likened to the relative distance between the ladder’s rungs, where greater inequality corresponds to a more stretched-out ladder. Income mobility, on the other hand, is a much more multifaceted concept. The most common way of measuring it is relative mobility, which tries to quantify the mobility between the rungs of the ladder, where an upward jump for one born poor necessarily implies a downward shift for one born richer.

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Article 3 explores the potential of public education to mitigate inequities by examining the causal effects of a 1989 Swedish teacher strike that caused school closures. The article reveals that the strike had both negative short-run effects, measured as student results, and long-run effects, measured as earnings, and the effects were larger for individuals from low-income backgrounds.

In summary, this dissertation provides both empirical and methodological contributions to the intricate relationship between inequality and mobility.

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Artikel (med peer review)Publikation
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Publicerat i

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Sammanfattning

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