Researchers have long looked to parental income as a key factor in determining intergenerational mobility. However, parental income is not fixed over time, and parental expenditures on children change as a child ages, from predominantly food, health, and shelter when a child is young, for example, to education and neighborhoods through adolescence. As this new research reveals, taking a trajectories-based approach to income and expenditures delivers important new insights into intergenerational mobility.
The authors’ trajectories-based approach allows them to link parental income at each offspring age to the child’s future permanent income. Among other features of the authors’ methodology, their approach offers more precision when measuring age-specific parental income effects (please see the working paper for more details). The authors find the following:
Bottom line: Parental income plays different roles over the life of a child and, likewise, has different effects at given ages. This work reveals how the measurement of intergenerational mobility is enhanced by a consideration of how the dynamics of family income over childhood and adolescence predict adult outcomes. Importantly, for those interested in the role of parental income in intergenerational mobility, this work suggests an especially important role for incomes in adolescence.