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Economics

Measuring Social Mobility Through Intergenerational Income Elasticity

Quick fact

In a perfectly mobile society, intergenerational income elasticity would be 0, meaning a child's income is completely unrelated to their parents' income. In reality, it ranges from about 0.2 in Nordic countries to nearly 0.5 in the United States, showing that parental income plays a substantial role in shaping children's economic futures.

Why this is interesting

What if we could predict a child's future income from their parents' income? Intergenerational income elasticity gives us a number that does exactly that.