Research

Abstract: 

The estimation of intergenerational mobility ideally requires full income histories to determine lifetime incomes. However, as empirical applications are typically based on shorter snapshots, the resulting estimates are subject to lifecycle bias. While the literature has followed different strategies to address this problem, we use long income series from Sweden and the US to illustrate that existing methods struggle to account for one important property of income processes: children from more affluent families tend to experience faster income growth, even conditional on their own observable characteristics. We propose a lifecycle estimator that captures this pattern and show that it performs well across different settings. We then apply this estimator to study mobility trends in Sweden and in the US, including for more recent cohorts that could not be considered in prior work. Our results show that despite rising income inequality, intergenerational income mobility was largely stable over cohorts born 1950-1989 in both Sweden and the US.

Abstract: 

Using complete-count register data spanning three generations, we document spa- tial patterns in inter- and multigenerational mobility in Sweden. Across municipal- ities, grandfather-child correlations in education or earnings tend to be larger than the square of the parent-child correlations, suggesting that the latter understate sta- tus transmission in the long run. Yet, conventional parent-child correlations capture regional di!erences in long-run transmission and therefore remain useful for compar- ative purposes. We further find that the within-country association between mobility and income inequality (the “Great Gatsby Curve”) is at least as strong in the multi- as in the intergenerational case. Interpreting those patterns through the lens of a latent factor model, we find that regional di!erences in mobility primarily reflect variation in the transmission of latent advantages, rather than in how those advantages translate into observed outcomes.

Abstract: 

This paper characterizes and proposes a method to correct for errors-in-variables biases in the estimation of rank correlation coefficients (Spearman's rho and Kendall's tau). We first investigate a set of sufficient conditions under which measurement errors bias the sample rank correlations toward zero. We then provide a feasible nonparametric bias-corrected estimator based on the technique of small error variance approximation. We assess its performance in simulations and an empirical application, using rich Swedish data to estimate intergenerational rank correlations in income. The method performs well in both cases, lowering the mean squared error by 50-85 percent already in moderately sized samples (n= 1000).

Abstract: 

This paper formulates a simple skill and education model to explain how better access to higher education leads to stronger assortative mating on skills of parents and more polarized skill and earnings distributions of children. Swedish data show that more skilled students increasingly enrolled in college and ended up with more skilled partners and more skilled children. Using educational expansions we find that better college access increases both skill sorting in couples and skill and earnings inequality among their children. All findings support that rising earnings inequality is, at least in part, supply driven by rising skill inequality.

Abstract: 

We study how students adjust their early career choices in response to economic crises, and how this behavioral response affects their long-run labor market outcomes. We specifically examine the context of the severe recession that struck Sweden in the early 1990s, which disproportionally affected the manufacturing and construction sectors. We find that students who experienced paternal job loss in these heavily affected sectors were more likely to choose high school programs linked to sectors less impacted by the recession. As a result, these individuals achieved better labor market outcomes in adulthood, including higher employment rates and career earnings. Our findings are consistent with informational frictions being a key obstacle to structural change, and we identify career choice as an important mechanism

through which recessions reshape labor markets in the very long run.

Abstract: 

Among economists, empirical analysis of social mobility and the role of parental background is largely carried out in two separate strands of research. The intergenerational mobility literature estimates parent-child persistence in a certain outcome of interest, such as income. In contrast, the equality of opportunity literature is rooted in a normative framework, and has only more recently started generating empirical evidence. Intergenerational mobility regressions are relatively straightforward to estimate, but their normative implications are less obvious. In contrast, measures of equality of opportunity have a policy-relelvant interpretation, but are demanding in terms of data, requiring the researcher to observe a large set of determinants of socioeconomic status for large samples. But maybe the two approaches capture similar underlying dynamics? We compare the two approaches by estimating both equality of opportunity and intergenerational mobility measures — as well as sibling correlations — across 16 birth cohorts within 126 Swedish local labor markets. Using these estimates, we test to what extent the different measures correlate, resulting in insights on the plausibility of interpreting intergenerational mobility measures as informative about equality of opportunity.