Why is father-son intergenerational mobility stable?

Using data from four surveys over a 40 year period, Andrew Leigh’s latest paper (pdf) argues that father-son intergenerational mobiliity is stable in Australia.

In his conclusion, as reported by The Australian, he says:

“On one view, the absence of any significant rise in inter-generational mobility might be regarded as surprising,” Dr Leigh says in the study report.

“Increases in healthcare coverage, the banning of racial discrimination, the abolition of up-front university tuition fees and an increase in the number of university places are among the policy reforms that might have been expected to increase inter-generational mobility.

“Yet there were also trends in the opposite direction.” These included rising unemployment during the study period and the removal of inheritance taxes in 1979. Dr Leigh said a rise in inequality had been well-documented with the distance between income groups greater in the early 2000s than in the mid-1960s.

I know conclusions are where they let academics off the referee’s leash, but some of this seems a bit odd to me. I’m not sure why improved healthcare coverage would make much difference; in any case claimed ‘disability’ is much higher than it used to be. Nor are bans on racial discrimination likely to have influenced the figures much; such laws are easily evaded and many migrant groups were doing fine long before discrimination was outlawed.

Inheritance taxes, as Andrew L’s own research shows (pdf), took only about 30% of the largest estates – something unlikely to affect the salary data he’s using (though it may affect investment income). And rising inequality is consistent with high mobility (if the poor and the rich swapped places each generation, ie complete mobility, inequality would be unchanged because it is a static, snapshot-in-time measure).
Continue reading “Why is father-son intergenerational mobility stable?”