A weighted global measure of intergenerational upward mobility without discretizing income distributions

Abstract

Measuring intergenerational upward mobility of income is crucial, yet the existing relative approaches can only reflect local mobility and suffer from discretization errors. In this paper, we propose a new global measure that can summarize all positive movements in the relative income positions of parents and children, a desirable feature not available in transition probability and directional rank mobility (Bhattacharya and Mazumder, 2011). Our approach first modifies the latter by conditioning on a single parental income rank rather than an interval to avoid arbitrary discretization of income distributions. We then integrate over the parents’ rank and the extent of movement of their offspring to obtain a weighted summary measure where more weight is placed on those with greater upward mobility. Similar treatments of downward mobility and absolute mobility are also provided. For estimation and inference, we propose a semiparametric distribution regression-based estimator and establish its asymptotic properties and bootstrap validity. Monte Carlo simulations and an empirical application illustrate the use of the proposed methods.

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