Economics
Longitudinal Analysis of Intergenerational Income Mobility Across OECD Countries
Quick fact
In the OECD, the United States has an intergenerational income elasticity of about 0.47, meaning a child born into a family with income 100% above the average tends to earn about 47% more than average as an adult—while in Denmark the elasticity is only around 0.15, suggesting far more mobility.
Why this is interesting
You might think that in rich countries like the US, a child's future income depends mostly on their own talents. But if you compare across OECD countries, the surprising truth is that where you grow up may matter just as much as what you do.
Read the full explanation
Understanding Longitudinal Analysis of Intergenerational Income Mobility Across OECD Countries
To see how income is passed from parents to children, economists need to follow the same families over many years. That's what 'longitudinal analysis' means: instead of taking a snapshot of different families at one time, you track specific families through time. In this case, researchers follow children from their childhood through adulthood, recording their parents' income and later their own income. Imagine you are a reporter writing a story about social mobility. You can't just ask people now how much they earn and guess their parents' earnings—you need to actually watch the same people over decades. That's why longitudinal studies are so valuable. By averaging multiple years of income for both parents and children, they reduce random fluctuations and get a truer picture of long-run economic status. Then, using a statistical measure called the intergenerational income elasticity (IGE), economists estimate how strongly a child's income is linked to their parents' income. A high IGE means low mobility—rich parents tend to have rich children, and poor parents tend to have poor children. A low IGE means high mobility—your income is less tied to your parents' income.
A deeper explanation
The core mechanism is the intergenerational income elasticity (IGE), typically estimated by regressing the log of child income on the log of parent income. The coefficient β represents the percentage difference in child income associated with a 1% difference in parental income. Across OECD countries, this coefficient varies widely: from around 0.15 in Nordic countries to about 0.47 in the US. Crucially, the IGE is a measure of persistence, not causation—it captures all the pathways through which parental income affects child income, including genetics, education, social capital, and direct financial transfers. Longitudinal analysis is essential because it allows researchers to use multiple-year averages to reduce life-cycle biases and measurement error. If you use single-year income, you capture transitory shocks that inflate the estimate. Additionally, the age at which income is measured matters; measuring child income too early or too late affects the estimate. The across-country variation is often linked to policy factors such as progressive taxation, public investment in education, and the structure of the labor market. Understanding these patterns helps policymakers see where opportunities are most blocked and what interventions might promote mobility.