MetricIMo · The Econometrics of Intergenerational Mobility
Horizon 2020 — Marie Skłodowska-Curie Actions
- Duration
- 2017-08-01 → 2020-07-31
- EU contribution
- €253,955
- Participants
- 3
- Scheme
- MSCA-IF-GF
Lines connect the coordinator with its partners.
Results in brief
The Econometrics of Intergenerational Mobility
This project studies the intergenerational mobility of well-being, which is arguably the most important dimension of inequality with huge policy implications. This type of inequality stems from how the socio-economic position of the children as they grow up to become adults relates to that of their parents. Put differently, it measures the degree of fluidity between the parental socio-economic status and offspring’s socio-economics status as adults. Broadly defined, the overall objectives of the project focus on the development and application using real data of a novel class of intergenerational econometric models of poverty traps to consider how the joint evolution of income, capabilities, and social influences can generate poverty traps. The challenge of separately identifying the effects of family and social influences will be mediated by considering the effects of shocks such as family shocks. The objectives of this project revolve around three interrelated ideas. First, when one examines the intergenerational mobility of well being it is not sufficient to examine how income is transmitted from parents to offsprings, but also consider how the skills of parents are transmitted to the skills of the children, which in turn, these capabilities/skills joined with incentives and social environment determine child outcomes, which ultimately factor into income. Second, since the timing of parental investments and shocks matters for the long-run outcomes of the children, the analysis must examine how the trajectory of parent’s outcomes is transmitted to the trajectory of child’s outcomes. Third, linear models of the standard empirical approach are too restrictive because they ignore nonlinearities suggested by theoretical models of credit constraints or neighborhood effects that can generate poverty traps or persistent poverty under certain conditions. The main reason why we are interested in intergenerational mobility is that it provides insights into the equality opportunity among individuals, which means that outcome inequalities are not defensible when a person is not responsible for them and hence individuals should be compensated to “level the playing field”. Understanding the role of social influences on poverty traps is also important because it provides a deeper understanding of the intergenerational transmission mechanism.
Data: CORDIS, © European Union
Project objective
This project studies the intergenerational transmission process of well-being, which measures the degree to which individuals and their families move between positions of social, economic and health status. Our interest in intergenerational mobility is motivated by its implications on equality of opportunity. Children are born into circumstances over which they have no control. Parents, schools, and neighborhoods transmit to children endowments and environment such as genes, economic resources, and capabilities, which shape children’s lifetime opportunities. These endowments are not only unequal by nature but also recent evidence suggests that the gaps in capabilities, which include cognitive skills, non-cognitive skills, and health stock from families of different socioeconomic status diverge from early age. While little can be done about it, policy makers can break the chain of persistence of inequality by providing resources to families so that disadvantaged children can reach their true potential. While there is large body of work on measuring intergenerational income mobility little is known about its cross-country determinants and the various channels of transmission. This project aims at filling these gaps in the literature by doing two things. In doing so, we develop new ways to measure mobility that move beyond linear measures to characterizations, which allow for the existence of poverty (and affluence) traps. In doing so, we develop an econometric framework using state-of-the-art statistical techniques and econometric methods that extend the empirical analysis of mobility beyond income to capabilities following Amartya Sen and the recent work of James Heckman. Capabilities measure the capacity to function in order to expand the potential outcomes for an individual. Second, we explore the effects of changes in the monetary policy regimes on mobility by focusing on two specific mechanisms that involve credit constraints and neighbourhood effects.
Original text from CORDIS.
Participants
- UNIVERSITY OF CYPRUS · NicosiaCoordinatorCyprus
- THE BOARD OF REGENTS OF THE UNIVERSITY OF WISCONSIN SYSTEM · MADISON WIUnited States
- THE UNIVERSITY OF CHICAGO · CHICAGO ILLINOISUnited States
Links
Data: CORDIS, © European Union