Intergenerational Income Mobility in the UK

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On the 24th of March, City-REDI held its third external seminar featuring Dr Bertha Rohenkohl from the University of Sheffield.

Intergenerational Income Mobility in the UK: New evidence using the BHPS and Understanding Society
Abstract:

Using a new dataset combining the British Household Panel Survey (BHPS) and Understanding Society (UKHLS), this paper examines the degree of intergenerational income mobility in the UK with a focus on younger cohorts born between 1973-1992.

Employing the traditional OLS approach as well as an alternative two-stage residual method that provides improved measures of long-run income for both generations, Dr Rohenkohl finds evidence of substantial intergenerational persistence in the transmission of resources at the household level.

The intergenerational elasticities indicate that around one-quarter of every additional percentage of income advantage enjoyed by parents is passed on to their children. The percentile rank coefficients corroborate these findings. An increase of 10 points in the rank distribution of parents relates to an improvement of around 3 points in the ranks of their children. The results are robust to changes in the specifications of the model and sample restrictions. The strength of this association is an important indicator of how family background influences living standards in adulthood.

Dr Rohenkohl also shows that there is geographical variation in income mobility by region of upbringing. Interestingly, regions in the North of England display substantially lower levels of both relative and absolute income mobility than in the South.

Summary of the event

Intergenerational Mobility shows “the extent to which an individual’s socioeconomic outcomes in adulthood are related to family and parental background”. This is important because low intergenerational mobility levels are both a cause and a consequence of higher inequality outcomes.

  • In the UK, although there are high levels of income inequality and relatively low intergenerational mobility, the current evidence is dated, making it difficult to make comparisons.
  • This study estimates intergenerational income mobility in the UK for a younger generation using new combined data from the British Household Panel Survey (BHPS) and Understanding Society (UKHLS) and looks at the geographical variations in intergenerational income mobility.
  • It looks at (absolute and relative) income mobility or “how close an individual’s position on the economic ladder is tied to their parent’s position” using intergenerational elasticities (income) and rank coefficients (position).
  • The study found that the UK is still relatively immobile by international standards and that intergenerational income mobility is similar for sons and daughters. In addition, although the study suggests that where you grow up matters and the existence of a North and South divide is very clear, more data is required and further analysis considering smaller geographical areas and differences between ethnic groups.

Upcoming City-REDI Seminars:
Date Speaker Organisation Seminar title Book a place
21st April Dr Katy Jones Manchester Metropolitan University, UK Active labour market policy in a post-Covid UK: moving beyond a ‘Work First’ approach Book a place
28th April Dr Stephen Fisher University of Oxford, UK Socio-political consequences of regional economic divergence in Britain: 1983-2018 Book a place
5th May Dr Michael Wyrwich University of Groningen, Netherlands Cross‑faculty proximity and academic entrepreneurship: The role of business schools Book a place
19th May Dr Levi Wolf University of Bristol, UK Space and place in predictive models Book a place
2nd June Dr Rhiannon Pugh CIRCLE, Lund University, Sweden The changing roles of universities during the Covid crisis Book a place
16th June Beatriz Jambrina Canseco, PhD LSE, UK The stories we tell ourselves: Local newspaper reporting and support for the radical right Book a place

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