THE BLOG
04/18/2010 05:12 am ET Updated Dec 06, 2017

Like Father, Like Son

The tendency of sons to have similar earnings to their fathers' is stronger in the U.S., Great Britain and Italy than in nine other rich countries. The OECD has compiled research comparing intergenerational mobility across countries, which shows the Nordic countries and Australia have the lowest correlation.

The report has received some attention here and there, but the idea of class status fixed over generations is not part the American self identity the way it is in Britain.

The OECD offers morally-neutral reasons to be concerned about intergenerational mobility:

First, less mobile societies are more likely to waste or misallocate human skills and talents. Second, lack of equal opportunity may affect the motivation, effort and, ultimately, the productivity of citizens, with adverse effects on the overall efficiency and the growth potential of the economy.

You might think binding children's wealth to their parents' success violates the spirit of meritocracy, since it limits people's ability to make their own destiny. Many other accidents of birth -- most prominently, but rarely remarked upon, the country one is born in -- have equally important and objectionable consequences for how people's "skills and talents" and "productivity" are wasted. Doesn't this affect the "overall efficiency and the growth potential" of the world economy?

The OECD report reaches back to an analysis by Gary Solon from 2002, so the news is not new: "At this stage, it seems reasonable to conclude that the United States and the United Kingdom appear to be less mobile societies than are Canada, Finland and Sweden." As Lee Rainwater and Timothy Smeeding showed in their book Poor Kids in a Rich Country, poverty increased among children in Britain and the U.S. in the last quarter of the 20th century, unlike most rich countries.

The strength of the social class tie between parents and children is determined in part by how much inequality there is at any point in time, and then by how much education or skill levels are transmitted from parents to children, as well as how much education and skills affect income. All of those factors are amenable to social intervention. Throughout is also the role of social capital, which sometimes appears as the dark matter of intergenerational transmission.

Lots of people assume this transmission is genetic, which most sociologists reject. Even to the extent that it is, though, the variation across countries tell us something. Whatever the mechanisms of transmission, it might be cut from U.S. rates by more than two-thirds to the Denmark level. So either the genetic connection is weak, or it can be overcome by social practices and policies.

The OECD report includes some analysis of policy differences, especially regarding education. They conclude:

Policies that facilitate access to education of individuals from disadvantaged family backgrounds promote intergenerational wage mobility, and are also likely to be good for economic growth. Examples include inter alia school practices that start grouping or "tracking" students only late in their educational curricula so as to encourage the social mix within schools, or government-supported loan or grant systems that reduce students' dependence on their families for financing their post-secondary studies.

Just a suggestion.

Cross posted from the Family Inequality blog.