A Theory of Intergenerational Mobility

Gary  Becker; Scott Duke Kominers; Kevin  Murphy; Jorg L. Spenkuch

Article | Journal of Political Economy | October 2018

A Theory of Intergenerational Mobility

by Gary Becker, Scott Duke Kominers, Kevin Murphy and Jorg L. Spenkuch

Abstract

We develop a model of intergenerational resource transmission that emphasizes the link between cross-sectional inequality and intergenerational mobility. By drawing on first principles of human capital theory, we derive several novel results. In particular, we show that, even in a world with perfect capital markets and without differences in innate ability, wealthy parents invest, on average, more in their offspring than poorer ones. As a result, persistence of economic status is higher at the top of the income distribution than in the middle. Successive generations of the same family may even cease to regress towards the mean. Moreover, we demonstrate that government interventions intended to ameliorate inequality may in fact lower intergenerational mobility—even when they do not directly favor the rich. Lastly, we consider how mobility is affected by changes in the marketplace.

Keywords: intergenerational mobility; inequality; human capital; complementarities; Equality and Inequality; Human Capital; Income; Family and Family Relationships;

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Becker, Gary, Scott Duke Kominers, Kevin Murphy, and Jorg L. Spenkuch. "A Theory of Intergenerational Mobility." Journal of Political Economy 126, no. S1 (October 2018): S7–S25.

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A Theory of Intergenerational Mobility

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