Measuring intergenerational income mobility: a synthesis of approaches
Working paper here
with Bhash Mazumder
The literature on intergenerational income mobility uses a diverse set of measures and there is limited knowledge about whether these measures provide similar information and yield similar conclusions. We provide a framework to highlight the key concepts and properties of the different estimators. We then show how these measures relate to one another empirically. Our main analysis uses income tax data from Australia to produce a comprehensive set of empirical estimates for each of 19 different mobility measures at both the national and regional level. We supplement this analysis with other data that uses either within or between country variation in mobility measures. A key finding is that there is a clear distinction between relative and absolute measures both conceptually and empirically. A region may be high with respect to absolute mobility but could be low with respect to relative mobility. However, within broad categories, the different mobility measures tend to be highly correlated. For rank-based estimators, we highlight the importance of how the choice of the distribution used for calculating ranks can play a critical role in determining its properties as well as affect empirical findings. These patterns of results are important for policy makers whose local economy might fare well according to some mobility indicators but not others.
Intergenerational mobility across Australia and the stability of regional estimates
with Bhash Mazumder
Published in Labour Economics, Volume 66, October 2020 (link)
Earlier version (Earlier working paper here)
We produce the first estimates of intergenerational mobility in Australia using administrative data, covering a million individuals born between 1978 and 1982. Australia emerges as one of the more mobile advanced economies, with a rank-rank slope of 0.215 and an intergenerational elasticity of 0.185. This picture of mobility remains under a range of exercises designed to test traditional methodological concerns. While mobility is rapid through most of Australia, there is meaningful dispersion: the mining boom in particular appears to have lifted incomes for those raised in affected regions over the period in question. We extend a generalised error-in-variables model to provide a framework for thinking about the stability of these regional mobility measures. In line with this model, regional rank-rank slopes steadily increase over the period we observe, while the expected (national) income ranks of children fluctuate in ways that partly mirror the changing economic fortunes of Australian regions.
Intergenerational income mobility – income ranks
What drives second generation success? The roles of education, culture and context
Published in Economic Inquiry, Volume 58, No. 4, October 2020 (link)
Earlier version (Earlier working paper here)
I explore differences in intergenerational income mobility among second generation Australians — why do some communities do better or worse than would be expected from first generation incomes alone? I present a new decomposition of this exceptional income mobility, finding exceptional educational mobility drives many of these differences. Drawing on rich survey and test score data, I provide evidence that educational mobility partly reflects a role for culture — but also the wider context of migration. In particular, migrants facing higher first generation income penalties tend to aspire to and acquire more education, and see it as more important to success.
Intergenerational income mobility for Australian migrant communities
Place, Peers, and the Teenage Years: Long-Run Neighbourhood Effects in Australia
Published in the American Economic Journal: Applied Economics, Volume 12, No. 2, April 2020 (link)
Earlier version (Earlier working papers: here and here)
I use variation in the age at which children move to show that where an Australian child grows up has a causal effect on their adult income, education, marriage and fertility. In doing so, I replicate Chetty and Hendren (2018a) in a country with less inequality, more social mobility and different institutions. Across all outcomes, place typically matters most in the teenage years. Finally, I provide suggestive evidence of peer effects using cross-cohort variation in the peers of permanent postcode residents: those born into a richer cohort for their postcode tend to end up with higher incomes themselves.
How much of the effect of your destination you get, based on when you move
Featured in the Sydney Morning Herald, 17 March 2018, by Peter Martin.
Baby Bonuses: natural experiments in cash transfers, birth timing and child outcomes
with Bob Breunig
Published in the Economic Record, Volume 94, Issue 304, March 2018 (link)
In this paper we use the 1 July 2004 introduction of the Australian Baby Bonus to identify the effect of family income on child test scores at grade three. We use a difference-in-differences design. We find no evidence the Baby Bonus improved child outcomes in aggregate, but some evidence of a modest effect for children from disadvantaged backgrounds. We examine whether birth shifting associated with the Baby Bonus and two other Australian maternity payments has negative long-term effects on children. Despite concerns about this unintended treatment, we find no clear evidence of health or educational consequences.
The relationship between immigration to Australia and the labour market outcomes of Australian-born workers
with Bob Breunig and Hang Thi To
Published in the Economic Record, Volume 93, Issue 301, June 2017 (link)
We examine the relationship between immigration to Australia and the labour market outcomes of Australian-born workers. We use immigrant supply changes in skill groups, defined by education and experience, to identify the impact of immigration on the labour market. We find that immigration flows into those skill groups that have the highest earnings and lowest unemployment. Once we control for the impact of experience and education on labour market outcomes, we find almost no evidence that immigration harms the labour market outcomes of those born in Australia.
Featured in the Sydney Morning Herald, 14 March 2018, by Peter Martin and 16 July 2017, by Jessica Irvine.