Gary Marks

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Since the early 1990s there has been a growing body of research on intergenerational income elasticities and correlations. One of the most prominent findings is that these associations are much higher in the United States (and the United Kingdom) than in Canada, Australia and many European countries. This finding is often interpreted as America being much less fair than other industrialized societies since the reproduction of economic inequalities is substantially stronger. This chapter questions these conclusions on the following grounds: (i) inconsistencies with other outcomes, such as socio-economic inequalities in student achievement, educational attainment, occupation attainment and the patterning of intergenerational occupational mobility, (ii) family income having weaker effects on educational attainment (which has substantial effects on earnings and income) than other parental characteristics and (iii) methodological issues such as estimates based on the concept of ‘permanent income’ and the use of instrumental variables. Even if the consensus estimate of 0.4 for the intergenerational correlation in the United States is accepted, it may not mean that the United States is unusually unfair due to larger regional differences in labour market returns and/or stronger associations between parents’ and their children's ability, ability and education attainment, and education and earnings.

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Journal Article

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