Research Network on Intergenerational Mobility

Standard intergenerational measures have been shown to understate the long-run persistence of socioeconomic advantages in developed countries. We study theoretically and empirically whether this pattern extends to less developed settings, using Indonesia as a case study. We estimate multigenerational correlations in education across three generations, using five waves of the Indonesian Family Life Survey (IFLS) and the 1995 and 2005 Censuses. Contrary to previous findings, we find a negative grandparent-grandchild coefficient, implying greater educational mobility than the intergenerational correlations from developing contexts typically suggest. We build a theoretical framework to identify two key factors influencing multigenerational transmission in developing countries: (1) financial and credit constraints, and (2) cultural norms surrounding marital sorting. To test the salience of these mechanisms in Indonesia, we analyze regional variations in marital practices, education expenditures, and the impact of 1997 Asian financial crisis.