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Chapter 1, From Parents to Children: The Intergenerational Transmission of Advantage

Chapter 1, From Parents to Children: The Intergenerational Transmission of Advantage

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The introduction to our book on inequality and mobility. Buy a copy: https://www.russellsage.org/publications/parents-to-children
The introduction to our book on inequality and mobility. Buy a copy: https://www.russellsage.org/publications/parents-to-children

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Published by: Russell Sage Foundation on May 18, 2012
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02/25/2015

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3
Chper 1
advnge inComprive Perspecive
 john
 
ermisch
,
markus
 
 jäntti
,
timothy
 
smeeding
,
and
 
 james
 
a
.
wilson
O
f
 
all
 
the
poenil consequences o rising economic inequliy,none is more worrisome, or more difcul o sudy, hn he possi- biliy h rising inequliy will hve he long-erm eec o reduc-ing equliy o opporuniy nd inergenerionl mobiliy. the resoningunderlying his worry is srighorwrd. Fmilies clerly hve  srongineres in invesing in he uure socil nd economic well-being o heirchildren. alhough some o hese invesmens my no require fnncilresources, mny ohers obviously do—mong hem, pying or quliychild cre nd erly childhood educion, buying books nd compuers,living in higher-priced neighborhoods wih ccess o good public schools,ssising wih college coss, nd providing suppor or young duls ohelp hem ge sred in heir independen economic lives once heir educ-ion is compleed. as fnncil resources hve become more unequl in number o counries over he ls hree decdes, he dierences in he cpc-iies o rich nd poor milies o inves in heir children lso hve becomemore unequl. this chnge is occurring in  period when relively moreeducionl invesmen is needed o mee ongoing lbor mrke chnges(Goldin nd Kz 2008). I ollows h unless hese inequiies re ose by public policies designed o modere heir eecs, he children o herich will hve  relively beer chnce o sying rich in he uure, ndhe children o he poor will hve less chnce o escping povery or lowsocioeconomic sus (SES).Invesmens in children re even broder hn his discussion suggess.an
investment
is  diversion o curren resources, such s ime or money,rom use or immedie consumpion o goods nd services we vlue,o civiies h py o in he uure in erms o ddiionl resources,including hose h benef our children. a prime exmple is o course
 
4 From Prens o Children
educion, bu mny civiies h prens crry ou on behl o heirchildren re invesmens in  similr sense. Some o hem my involve low monery cos, bu require n invesmen o ime, such s underk-ing mny dieren ypes o civiies wih children (or exmple, ech-ing hem o swim or reding o hem). In engging in such civiies,prens increse heir own enjoymen nd curren well-being s well s beneing heir children in ler lie. Oher child-reled civiies cn be quie cosly, such s pying universiy uiion. and some civiiesmy bene children in  dieren dimension hn he iniil invesmen.For exmple, in ddiion o iding heir cogniive developmen, prensnd schools help socilize children, ech hem o behve coureously,provide moivions, nd work in  vriey o wys o id heir socioemo-ionl developmen. these ris my no only py o in he socil nd behviorl dimension, bu redy hem or school so h heir cogniivedevelopmen is enhnced s well. Socil nd behviorl ris my lso be more imporn or uure ernings nd jobs s employers my highlyvlue such ris. In economic prlnce, here is complemenriy beweeninvesmens in he socil (socioemoionl) nd cogniive dimensions.Furher, ll such invesmens ke plce in insiuionl conexs hprovide leewy or prens nd governmens o infuence how eec-ive such invesmens my be. For insnce, universl erly childhoodeducion or ll children migh be especilly benecil or he lowes-SES children i ll such progrms hd comprble resources. However,o he exen h he quliy o preschools nd echers is subjec oneighborhood eecs s in elemenry nd secondry schooling inmny nions, low-SES children re likely o be excluded rom he bespreschools nd hereby lessen he equlizing eec o erly childhoodeducion. Oher childhood invesmens my lso be subjec o insi-uionl consrins, nepoism, biliy o py nd co-unding, includ-ing uiion or colleges nd universiies (or exmple, on U.S.-Cndindierences in nncil id nd eriry school compleion, see Belley,Frenee, nd Lochner 2010).alhough here is evidence h prenl invesmens in childrenhve become more unequl over he ps hiry yers in some counries(Kushl, Mgnuson, nd Wldogel 2011), nlysis o he bes muli-generionl d vilble in he Unied Ses (rom he Pnel Sudyo Income Dynmics) does no show  cler decline in inergenerionlmobiliy beween children born in he 1950s nd hose born in he le1970s, jus beore inequliy begn o rise (Lee nd Solon 2009). Pr ohe problem my be mesuremen error. the individuls in he cohor born during he period o rising inequliy re only in heir erly hir-ies, sill  bi oo young o provide relible esimes o lieime income.anoher possibiliy is h he grdul, hiry-yer rise in inequliy inhe Unied Ses nd smller increses elsewhere re sill oo smll
 
advnge in Comprive Perspecive 5
o hve he ypes o negive eecs suggesed by incresed economicinequliy.O course, i is lso possible h he predicion h high inequliyleds o low mobiliy is simply wrong. Bu one compelling reson odoub his is he recen discovery h he prediced relionship doesshow up in cross-nionl comprisons. Figure 1.1 presens he relion-ship beween income inequliy (mesured by he Gini coefcien orhe prens’ generion) nd he inergenerionl income elsiciy—mesure o he srengh o he relionship beween he incomes o pr-ens nd he incomes o heir grown children. Mobiliy is mesured she inverse o he elsiciy in fgure 1.1, hence he lower he elsiciyhe greer he mobiliy. Indeed, mos mesures o mobiliy re cullymesures o persisence o he younger generion’s plce in he order ooucomes compred o heir prens. So when elsiciies re high, hepren–dul child relionship is sronges. this plo includes elevenindusrilized counries where boh mesures re now vilble nddemonsres wide vrince in inergenerionl mobiliy cross hosecounries (Björklund nd Jäni 2009).as fgure 1.1 shows, he relionship beween inequliy nd iner-generionl elsiciy is moderely posiive. Higher levels o inequliy
Figure 1.1 Estimates of Intergenerational Income Elasticities for Fathersand Sons, Early 1980s
00.10.20.30.40.50.60.150.20.25Gini0.30.35CanadaU.S.U.K.SwedenNorwayDenmarkGermanyAustraliaFrance
   I  n  c  o  m  e   E   l  a  s   t   i  c   i   t  y   (   b   )
Source:
Authors’ calculations based on data from Bjorklund and Jäntti (2009,figure 20.1).FinlandItaly

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