Chapter 8 Theories of persistent inequality and intergenerational mobility

doi:10.1016/S1574-0056(00)80011-1

Handbook of Income Distribution

Volume 1, 2000, Pages 429-476

https://doi.org/10.1016/S1574-0056(00)80011-1 Get rights and content

Publisher Summary

This chapter reviews the existing theories of persistent inequality across generations. The chapter discusses total economic inequality both in wealth and in earnings and focuses on the intergenerational mobility dimension of total inequality. The chapter presents a nonexhaustive, nontechnical survey of existing empirical work about intergenerational mobility and persistent inequality among dynasties. The question of intergenerational mobility has always been one of the most controversial issues indeed, both in actual political conflicts and in academic writings by social scientists, and conflicting theories in this area have very often been motivated by conflicting qualitative perceptions of the extent of mobility (and conversely).

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The persistent inequality thesis has generated a large research literature that rarely considers cognitive ability. The concept of persistent inequality has been extended to ‘persistent’ socioeconomic inequalities in occupational attainment, income and wealth (Piketty, 2000). For occupational attainment, Breen and Goldthorpe (2002) claim that ability plays only a minor role in explaining social class inequalities, their central concern.
Few issues in the social sciences are as controversial as the role of cognitive ability for educational and subsequent socioeconomic attainments. There are a variety of arguments raised to dismiss, discount or discredit the role of cognitive ability: socioeconomic background is the dominant influence; if cognitive ability appears important, that is only because important predictors have been omitted; the relative importance of socioeconomic background and cognitive ability cannot be ascertained; and cognitive ability is simply a function of socioeconomic background and, for post-education socioeconomic attainments, education. This study analyses the effects of cognitive ability and socioeconomic background on a chronological sequence of social stratification outcomes - school grades, SAT and ACT scores, educational and occupational attainment, income and wealth - in data from the 1979 and 1997 National Longitudinal Surveys of Youth. The coefficients for cognitive ability decline marginally with the addition of socioeconomic background measures, including family-of-origin income averaged over several years, and wealth. In contrast, socioeconomic background coefficients decline substantially with the addition of cognitive ability. Net of educational attainment, cognitive ability has sizable effects on occupational attainment and income. Net of socioeconomic background, education and occupation, a one-standard-deviation difference in ability corresponds to a sizable 43% difference in positive wealth at around age 35 in the older cohort and a 25% increase in the younger cohort. Therefore, contrary to dominant narratives, cognitive ability is important to a range of social stratification outcomes, and its effects cannot be attributed to socioeconomic background or educational attainment.
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Chapter 8 Theories of persistent inequality and intergenerational mobility

Publisher Summary

Journal of Monetary Economics

Journal of Public Economics

Journal of Economic Theory

Cognition

Fiscal policy with impure intergenerational altruism

Journal of Political Economy

Public policy in a model of long-term unemployment

Economica

A trickle-down theory of growth and development with debt-overhang

Review of Economic Studies

Optimal Capital Income Taxation with Incomplete Markets, Borrowing Constraints and Constant Discounting

The theory of Discrimination

Inheritance and the redistribution of wealth

On intergenerational income mobility in Britain

Journal of Post-Keynesian Economics

Parents and Children: Incomes in Two Generations

Empowerment and efficiency: the economics of tenancy reform

Occupational choice and the process of development

Journal of Political Economy

Poverty, incentives and development

American Economic Review

Family economics and macro behavior

American Economic Review

On the economics of the family: reply to a skeptic

American Economic Review

A Treatise on the Family

An equilibrium theory of the distribution of income and intergenerational mobility

Journal of Political Economy

Human capital and the rise and fall of families

Journal of Labor Economics

A reformulation of the economic theory of fertility

Quarterly Journal of Economics

Intergenerational earnings mobility in the United States: some estimates and a test of Becker's intergenerational endowments model

Review of Economics and Statistics

Workings of a city: location, education, production

Quarterly Journal of Economics

Heterogeneity, stratification and growth: macroeconomic implications of community structure and school finance

American Economic Review

Equity and efficiency in human capital investment: the local connection

Review of Economic Studies

What Level of Redistribution Maximizes Long-Run Output?

How strong are bequest motives? evidence based on estimates of the demand for life insurance and annuities

Journal of Political Economy

Is everything neutral?

Journal of Political Economy

Intergenerational mobility of economic status: is the United States different?

Ethnic capital and intergenerational mobility

Quarterly Journal of Economics

Ethnicity, neighborhoods and human capital externalities

American Economic Review

Les héritiers

La reproduction

L'inégalité des chances

Education, Opportunity and Social Inequality

Pareto-superiority of unegalitarian equilibria in Stiglitz' model of wealth distribution with convex savings function

Econometrica

Schooling and inequality from generation to generation

Journal of Political Economy

Schooling in Capitalist America

Does school quality matter?

Journal of Political Economy

Myth and Measurement: the New Economics of the Minimum Wage

Capital Income Taxation, Income Distribution and Borrowing constraints

Primogeniture

Journal of Political Economy

Will affirmative-action policies eliminate negative stereotypes?

American Economic Review

Social norms, savings behavior and growth

Journal of Political Economy

Equality of Educational Opportunity

Report to the US Department of Health, Education and Welfare

Can equalization of opportunity reduce social mobility?

American Economic Review

On the evolution of economic status across generations

Are ghettos good or bad?

Quarterly Journal of Economics

Intergenerational mobility in Britain

Economic Journal