The Political Economy of Intergenerational Income Mobility / Andrea Ichino, Loukas Karabarbounis, Enrico Moretti.

Format:

Book

Author/Creator:

Ichino, Andrea.

Contributor:

National Bureau of Economic Research.

Karabarbounis, Loukas.

Moretti, Enrico.

Series:

Working Paper Series (National Bureau of Economic Research) no. w15946.

NBER working paper series no. w15946

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2010.

Summary:

The intergenerational elasticity of income is generally considered one of the best summary measures of the degree to which a society gives equal opportunity of success to all its members, irrespective of their family background. We present a parsimonious political economy model and show how the interaction between private and collective decisions determines the equilibrium level of mobility. Contrary to what it is generally assumed, a low correlation between father income and son income is not always desirable, as it may imply more inefficiency due to the distortionary effects of mobility-enhancing public policies. Moreover, taking into account the heterogeneity in preferences for intergenerational mobility leads to the conclusion that even if a fully mobile society is desirable ex ante, it may not be politically sustainable ex post. Our model clarifies the structural parameters behind the widely studied intergenerational elasticity of income in terms of political economy forces. Finally, we show some empirical evidence on the relationship between intergenerational elasticity of income across countries and its underlying determinants that is consistent with the predictions of the model.

Notes:

Print version record

April 2010.