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We quantify intergenerational and assortative processes by comparing different degrees of kinship within the same generation. This “horizontal” approach yields more, and more distant kinship moments than traditional methods, which allows us to account for the transmission of latent advantages in a detailed intergenerational model. Using Swedish registers, we find strong persistence in the latent determinants of status, and a striking degree of sorting – to explain the similarity of distant kins, assortative matching must be much stronger than previously thought. Latent genetic influences explain little of the variance in educational attainment, and sorting occurs primarily in non-genetic factors.

The estimation of intergenerational mobility ideally requires full income histories to determine lifetime incomes. However, as applications are typically based on shorter snapshots, estimates are subject to lifecycle bias. Using long income series from Sweden and the US, we illustrate that standard correction methods struggle to account for one important property of income processes: children from more affluent families tend to experience faster income growth, even conditional on their own characteristics. We propose a lifecycle estimator that captures this pattern and that performs well across different settings. We then apply this estimator to study mobility trends in Sweden and in the US, including for more recent cohorts that could not be considered in prior work. Despite rising income inequality, intergenerational income mobility remained largely stable over cohorts born 1950-1989 in both countries.

We use complete-count register data to describe various features of intergenerational mobility in Sweden. First, we document the extent of regional variation in educational and income mobility across Swedish municipalities, and describe its spatial pattern. Second, we study the stability of such regional rankings to the choice of mobility statistic. Third, we show that income inequality and mobility are negatively related, across all mobility measures. Fourth, we exploit variation in local exposure to show that the 1990s economic crisis and the 2007-2008 fi nancial crisis had a negative eff ect on income mobility.

We study the fiscal and tax response to intergovernmental grants, exploiting quasi-experimental variation within Germany’s fiscal equalization scheme triggered by Census revisions of official population counts. Municipal budgets do not adjust instantly. Instead, spending and investments adapt within five years to revenue gains, while adjustment to revenue losses is more rapid. Yet, the long-run response is symmetric. The tax response is particularly slow, stretching over more than a decade. Well-known empirical “anomalies” in public finance such as the flypaper effect are thus primarily a short-run phenomenon, while long-run fiscal behavior appears more consistent with standard theories of fiscal federalism.

University students have been particularly affected by the COVID-19 pandemic. We present results from the first wave of the Global COVID-19 Student Survey, which was administered at 28 universities in the United States, Spain, Australia, Sweden, Austria, Italy, and Mexico between April and October 2020. The survey addresses contemporaneous outcomes and future expectations regarding three fundamental aspects of students' lives in the pandemic: the labor market, education, and health. We document the differential responses of students as a function of their country of residence, parental income, gender, and for the US their race.

This report summarises some of the most relevant theoretical and empirical challenges associated with the measurement and analysis of multidimensional inequalities. Each section delves into a specific topic, presents a state-of-the-art review of the key findings in that particular area, and proposes a number of policy recommendations and avenues for further research. The themes covered in this report range from the multidimensional nature of human wellbeing and quality of life, the multiplicity of life domains in which substantial inequalities can be found, the dynamic nature of those inequalities, the transmission of advantages and disadvantages over time, the availability of new data sources for fine-grained data collection and higher spatial resolution policy-making, the interplay of individual effort and external circumstances when it comes to identifying a just distribution of opportunities in society, as well as the relevance of lifetime approaches for the study of economic inequalities within countries. The content of this work will provide help and guidance to policy-makers willing to understand and tackle inequalities from a broader multidimensional perspective, beyond the narrow limits of economic indicators alone.

This report summarises some of the most relevant theoretical and empirical challenges associated with the measurement and analysis of multidimensional inequalities. Each section delves into a specific topic, presents a state-of-the-art review of the key findings in that particular area, and proposes a number of policy recommendations and avenues for further research. The themes covered in this report range from the multidimensional nature of human wellbeing and quality of life, the multiplicity of life domains in which substantial inequalities can be found, the dynamic nature of those inequalities, the transmission of advantages and disadvantages over time, the availability of new data sources for fine-grained data collection and higher spatial resolution policy-making, the interplay of individual effort and external circumstances when it comes to identifying a just distribution of opportunities in society, as well as the relevance of lifetime approaches for the study of economic inequalities within countries. The content of this work will provide help and guidance to policy-makers willing to understand and tackle inequalities from a broader multidimensional perspective, beyond the narrow limits of economic indicators alone., JRC.I.1-Monitoring, Indicators & Impact Evaluation

A large literature exploits geographic variation in the concentration of immigrants to identify their impact on a variety of outcomes. To address the endogeneity of immigrants' location choices, the most commonly-used instrument interacts national inflows by country of origin with immigrants' past geographic distribution. We present evidence that estimates based on this "shift-share" instrument conflate the short- and long-run responses to immigration shocks. If the spatial distribution of immigrant inflows is stable over time, the instrument is likely to be correlated with ongoing responses to previous supply shocks. Estimates based on the conventional shift-share instrument are therefore unlikely to identify the short-run causal effect. We propose a "multiple instrumentation" procedure that isolates the spatial variation arising from changes in the country-of-origin composition at the national level and permits us to estimate separately the short- and long-run effects. Our results are a cautionary tale for a large body of empirical work, not just on immigration, that rely on shift-share instruments for causal inference.

This report reviews evidence on intergenerational mobility and the transmission of socio-economic advantages from parents to children. The review examines conceptual questions on how to measure intergenerational mobility, empirical evidence on both descriptive and causal questions, and the data requirements that mobility research faces. The extent of income mobility varies substantially between countries, and appears negatively correlated with income inequality both across and within countries. For this reason, there is particular interest on mobility trends over time in those countries where income inequality has recently been increasing. However, the evidence for mobility trends in more recent cohorts is as yet less conclusive. Descriptive associations can only be suggestive of causal links, and the report also reviews evidence from more targeted research designs on the importance of (i) neighbourhoods and schools, (ii) early childhood and childcare, (iii) educational systems and track choice, (iv) private and public education, and (v) informational frictions and beliefs. The evidence demonstrates that educational policies can affect intergenerational mobility. An important trend in these and other literatures is the increasing use of administrative data sources, such as social security or tax data. The review discusses important hurdles in their adoption for mobility research, and points to data initiatives that could improve our understanding of intergenerational processes in the future., JRC.B.4-Human Capital and Employment

This paper characterizes and proposes a method to correct for errors-in-variables biases in the estimation of rank correlation coeffcients (Spearman's ρ and Kendall's τ). We first investigate a set of suffcient conditions under which measurement errors bias the sample rank correlations toward zero. We then provide a feasible nonparametric bias-corrected estimator based on the technique of small error variance approximation. We assess its performance in simulations and an empirical application, using rich Swedish data to estimate intergenerational rank correlations in income. The method performs well in both cases, lowering the mean squared error by 50-85 percent already in moderately sized samples (n = 1,000).

By exploiting a commuting policy that led to a sharp and unexpected inflow of Czech workers to areas along the German-Czech border, we examine the impact of an exogenous immigration-induced labor supply shock on local wages and employment of natives. On average, the supply shock leads to a moderate decline in local native wages and a sharp decline in local native employment. These average effects mask considerable heterogeneity across groups: while younger natives experience larger wage effects, employment responses are particularly pronounced for older natives. This pattern is inconsistent with standard models of immigration but can be accounted for by a model that allows for a larger labor supply elasticity or a higher degree of wage rigidity for older than for young workers. We further show that the employment response is almost entirely driven by diminished inflows of natives into work rather than outflows into other areas or non-employment, suggesting that "outsiders" shield "insiders" from the increased competition.

Estimates of the most common mobility measure, the intergenerational elasticity, can be severely biased if snapshots are used to approximate lifetime income. However, little is known about biases in other popular dependence measures. We use long Swedish income series to provide such evidence for linear and rank correlations, and rank-based transition probabilities. Attenuation bias is considerably weaker in rank-based measures. Life-cycle bias is strongest in the elasticity; moderate in the linear correlation; and small in rank-based measures. However, with important exceptions: persistence in the tails of the distribution is considerably higher, and long-distance downward mobility considerably lower, than estimates from short-run income suggest.

We examine how intergenerational income mobility responds to structural changes in a simple theoretical model of intergenerational transmission, deviating from the existing literature by explicitly analyzing the transition path between steady states. We find that mobility depends not only on current but also on past transmission mechanisms, such that changing policies, institutions or economic conditions may generate long-lasting trends. Variation in mobility levels across countries may thus be partly explained by differences in former institutions; current mobility trends may be caused by institutional changes in the past. We further find that transitions between steady states tend to be non-monotonic. Changes in the relative returns to different skills or a shift towards a less plutocratic and more meritocratic economy raise mobility initially, but also generate a negative trend over subsequent generations. Times of change thus tend to be times of high mobility, and declining mobility today may not reflect a recent deterioration of equality of opportunity but rather major improvements made in the past.