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Journal Issue: Opportunity in America Volume 16 Number 2 Fall 2006

Intergenerational Social Mobility: The United States in Comparative Perspective
Emily Beller Michael Hout

Social Mobility in the Contemporary United States

Having defined our terms and introduced some of the analytical distinctions that researchers use, we turn now to the heart of the matter: how much mobility Americans have experienced from their youth till now. We discuss occupational mobility first, and then turn to income and wealth mobility.

Intergenerational Occupational Mobility
One way to assess occupational mobility in the United States is to categorize occupations into a few classes and then measure the extent of class immobility, downward mobility, and upward mobility between generations. Using this technique, we analyzed nationally representative data on men and women born after 1950.7 We distinguished six general occupational categories in descending order: upper professional or manager, lower professional or clerical, self-employed, technical or skilled trade, farm, and unskilled and service workers.8 Among men, 32 percent were immobile (their occupation was in the same category as their father's), 37 percent were upwardly mobile, and 32 percent were downwardly mobile. Fifteen percent of the mobility was driven by structural change in the economy, or economic growth—more professional jobs and fewer farm jobs were available to sons than to their fathers; that also accounts for why upward mobility was more common than downward mobility. Women's mobility patterns reflect the gender segregation of the labor force, as well as opportunity and growth. Among women, 27 percent were immobile, 46 percent were upwardly mobile, and 28 percent were downwardly mobile. Most Americans regard sales and clerical jobs as better than most blue-collar jobs, so the millions of blue-collar men's daughters who work in stores and offices are upwardly mobile (just not very much). That particular type of short-range upward mobility accounts for the fact that more American women than men are upwardly mobile.

Table 1 shows the data for men from which the above estimates were generated. It shows the outflow of sons from each class background category to current occupational categories (in percentages). The bold diagonal entries show the percentage of men from each class background who stay where they began; this “stickiness” is greatest for the most and least advantaged class background categories. If we consider the column percentages instead (that is, the share in each class from each background category [data not shown]), it is striking that the proportion of immobile incumbents is almost always higher than the proportion drawn from any other class category. The most extreme example is that 66 percent of men in the farm class came from a farm background.

Another way to assess occupational persistence is to examine intergenerational occupational correlations. As noted, these correlations differ depending on which characteristic of occupations is the focus of research. For example, the intergenerational correlation of the prestige of fathers' and sons' occupations is lower than the correlation of the education level associated with their occupations.9 One of the most commonly used scales for measuring occupations is the socioeconomic status index (SEI), which provides a rank for each occupation. Average intergenerational father-son correlations in the SEI and similar indexes are in the neighborhood of 0.35 to 0.45, implying that some 12 to 21 percent of the variation in sons' occupations can be accounted for by fathers' occupations.10 The larger estimates are mostly from the early 1960s; the smaller ones are from the 1980s and 1990s.11 For the men in table 1 we calculate the correlation to be 0.32.12

Assessing whether a given intergenerational correlation or mobility rate reflects a low or high degree of occupational mobility requires determining an appropriate reference for comparison. Complete mobility is neither plausible nor, arguably, desirable, given that some of the factors leading to the intergenerational persistence of social position, such as cognitive ability or work effort, seem acceptable— that is, fair.13 Complete immobility is also implausible. In the absence of accepted definitions of what constitutes low or high mobility, one strategy is to contrast the U.S. estimates with those from a range of comparable countries. Comparisons with other industrialized countries (to which we turn later) support the prevailing idea that occupational mobility in the United States is reasonably high, as does the finding that U.S. occupational persistence does not extend past two generations.14

But one complication in analyzing occupational mobility using either SEI correlations or class mobility tables such as table 1 is that there is no straightforward way to incorporate two parents' occupations into the intergenerational correlations or class background categories. Thus occupational mobility research is limited, for the most part, to studies of father-child (or household head–child) occupational persistence. The case of income mobility, to which we turn next, is instructive: intergenerational associations appear to be weaker when calculations do not include both parents' earnings and other sources of family income. Of course, occupational statuses do not add together the way incomes do, so we use multivariate regression to calculate the total association between family background and occupational status. For the men in table 1 we find the multiple correlation is 0.38.

Intergenerational Income Mobility
The current consensus among researchers is that intergenerational persistence, or elasticity, between fathers' and sons' earnings in the United States lies at about 0.4 on the 0–1 scale described above.15 The persistence between total childhood family income and adult sons' family income or personal earnings is even greater, in the range of 0.54 to 0.6.16 An elasticity of 0.54 means that, for example, a 10 percent difference between two families' incomes is associated with a 5.4 percent difference in their sons' earnings. The corresponding elasticity between family income and daughters' earnings is lower, at 0.43. When analysts focus on married women, the elasticity between total childhood family income and adult daughters' total family income is 0.39. The same elasticity for married sons is 0.58. These gender-specific patterns occur because men contribute about 70 percent of family income, on average, and because there is an association between childhood family income and spouses' income.17

The conclusion that the intergenerational elasticity between father's and son's earnings in the United States is as high as 0.4 was reached only recently, and these estimates may understate the true income persistence, as more recent research has tended to raise estimates of the elasticity. Early estimates placed the father-son earnings elasticity at 0.2 or lower—indicating substantially more economic mobility than an estimate of 0.4 would imply.18

The upward trend in estimates reflects methodological improvements, probably not real-life trends. In the 1970s researchers had to estimate the size of intergenerational elasticities from one year of data about fathers and one year of data about sons. The newer, higher estimates accumulate income over five or more years for both fathers and sons.19 Another improvement has been the recognition that a person's age affects his or her earnings. Calculations based on young people's earnings understate the persistence that is seen when we observe people during their top-earning years.20 New, logically similar corrections are resulting in a further increase in the estimated elasticity to 0.6.21 We have doubts about this higher estimate for father-son earnings persistence. The theory behind accumulating data is that each family or person has a “true” income level but minor ups and downs (and measurement errors) produce variations around the true value that lower the elasticity. In the short run, this theory is credible. Over longer and longer spans, it becomes harder to believe that there is just one true value.

Elasticities are good indicators of a society's average level of intergenerational economic persistence, but they do not provide much information about mobility patterns. Mobility matrices that give the probability of children's economic position conditional on fathers' or family position provide a more detailed picture of intergenerational mobility. Similar to the pattern of occupational mobility shown in table 1, the income mobility matrix in table 2 shows that economic immobility is highest among children whose family incomes fall in the top or the bottom quartiles of the earnings distribution.22 This pattern is consistent with other U.S. economic mobility matrices, which show the greatest rigidity at the extremes of the distribution.23

That overall mobility rates are higher in the middle of the income distribution does not necessarily mean that the impact of family income is weaker in the middle than it is at the top and bottom of the distribution—by definition, people at the bottom of the distribution can experience only upward mobility, and the reverse is true at the top of the distribution. People in the middle have the prospect of moving either up or down.

Besides looking at descriptive income mobility matrixes, another way that researchers can learn more about mobility patterns than the average intergenerational elasticity can provide is to calculate separate estimates for people who start life at low, middle, and high points on the income distribution for their parents' generation. Some evidence suggests that the effect of childhood family income on adult income is stronger at the high end of the father's earnings distribution than at the low end.24

A different question is how the effect of family background differs along the son's earnings distribution rather than that of the father. Such analyses suggest that father's income is more persistent among sons with low earnings than among sons with high earnings.25 This implies that opportunity for upward mobility is more equal than the opportunity for downward mobility—presumably, advantaged parents are able to protect their children from downward mobility, but children from more disadvantaged backgrounds do have a greater chance of upward mobility than the intergenerational elasticity (which, as noted, describes the average level of mobility) would suggest.

Intergenerational Wealth Mobility
Finally, how does wealth mobility compare to occupation and income mobility? First, there is substantial intergenerational persistence in family wealth; the correlation is in the neighborhood of 0.50.26 Wealth is important because its distribution is far more unequal than the distribution of family income and because it seems to have greater effects on other aspects of family well-being, especially homeownership and investment in children's education.27

The disparity in wealth not only persists between the generations, it mushrooms. Without a cushion of inherited wealth, emergencies hit harder; and people who have no nest egg have to let opportunities pass by. Because of a wealth deficit, African Americans are more vulnerable to shocks and less able to capitalize on breaks than whites with the same income, so the next generation will inherit less too.28 The wealth gap will not close any time soon; wealthy people's assets grow at a rate that approximates that of the New York Stock Exchange.29 Furthermore, inherited wealth can put families in better neighborhoods and school districts than they could afford if they had to rely exclusively on their incomes.

At the very top of the wealth distribution, innovations in computer and telecommunications technologies created new fortunes in the 1980s and 1990s and pushed new people to the top of lists like the Fortune 400. As interesting as the extremely high tail of the wealth distribution is, however, those 400 wealthy people are not, by definition, representative of their 300 million fellow citizens. Thus most analyses of wealth mobility focus on the wealth differentials in representative samples of American families and households.30  Wealth mobility in the United States resembles occupational and income mobility in a few key respects.

A number of familiar features show up in the wealth mobility matrix in table 3. First, in each row, the main diagonal entries are the largest, indicating the relative strength of persistence and mobility. They are somewhat higher than comparable figures for family income. Second, the richest and poorest quintiles are less mobile than the middle groups, as was true for income mobility.