Who moves up the income ladder relative to their parents?

Who moves up the income ladder relative to their parents?

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Social ladder

A new study by INSEE’s Michael Sicsic reveals some surprises

Atlantico: You have, for Insee, conducted an investigation with the aim of knowing to what extent household income is decisive for intergenerational mobility, and therefore in the path of children. What is the point of precisely studying intergenerational mobility by income? What does this indicator tell us about the state of society?

Michael Sicsic: Intergenerational mobility is an indicator of a society’s ability to ensure equal opportunities. Studying it makes it possible to know to what extent inequalities are reproduced between generations. A long sociological tradition has studied this question by comparing the socio-professional categories of parents and children. The innovative approach of our study is to reason no longer in terms of professions but in terms of income: for the first time, we have been able to directly compare the income of a young adult with the income of his parents. This approach is complementary to that using socio-professional categories. These are, as their name suggests, “categories”, and income can vary greatly within a category. The approach by income makes it possible to classify individuals on an ordered scale (for example by fifth, tenth or hundredth or income) which remains comparable between generations and between territories in order to study their intergenerational mobility.

The central question remains, to what extent is parental income decisive in the educational path of children? What are the results of your research?

Our study highlights two main findings. The first is that the better the parents are ranked on the income scale, the better their children are also on average compared to the young adults of their generation: children from well-to-do families are three times more likely to be among the most affluent than those from modest families. But, and this is the second observation, there is upward and downward mobility: for the same level of parental income, children’s income varies greatly. For example, 12% of young adults aged 28 from bottom 20% families move up the income ladder to the bottom 20%.

You underline the differences of destiny within the siblings. To what extent and how to explain it?

Looking at siblings helps to understand the importance of the family environment in the distribution of income. Indeed, if the income of the parents totally influenced that of the children, then the income of siblings should be equal in adulthood. This is not what we observe: siblings (brothers and sisters studied separately to take into account the differences in income between men and women) have an average difference in rank of just over 2 deciles. This shows that there is no total reproduction of inequalities. There is, however, a partial reproduction of inequalities because this difference in rank remains lower (by 30%) than that measured between two young adults taken at random. We can therefore conclude that around 30% of the variability in income of young adults aged around 28 is linked to the family environment. We are talking here about the family environment in the broad sense and not just the income of the parents. Indeed, the children of the same family have in common the income of their parents, but not only: they also share a cultural capital, a genetic inheritance, and the influence of the social environment and the neighborhood.

What is the state of the intergenerational income mobility in France, compared to other countries of the European Union? Are the persistence of income levels and inequalities between generations being reproduced more than elsewhere?

It is difficult to answer this question precisely because studies on intergenerational income mobility are still rare and use methodologies that are not always comparable. By trying to carry out this comparison exercise, intergenerational mobility seems stronger in France than in the United States but less strong than in the Nordic countries, Canada and Switzerland. Upward mobility (climbing from the lowest to the highest fifth of income) is higher in France than in Germany according to OECD estimates. Estimates of intergenerational income mobility based on administrative panel data have developed strongly in recent years internationally: we bet that in a few years, we will be able to make more complete international comparisons.

If the parents’ income influences those of the children, they do not entirely determine them. What other factors can affect children’s earnings?

First, there are factors linked to the family but which are not parental income, such as cultural capital or education. But even these factors remain in the minority in the formation of children’s income. Analysis of siblings shows that around 70% of income variability is linked to factors outside the family, which is rather reassuring in terms of equal opportunities.

Concretely, what are the characteristics of the parents that will promote upward mobility? Downward mobility? Stagnation?

Our analysis shows that upward mobility is all the stronger when the parents have high capital income, are university graduates, have been geographically mobile, or when the children reside in Île-de-France when they come of age. Conversely, being a woman, having lived in a single-parent family, having working or salaried parents, or living in Hauts-de-France when you come of age are factors that reduce the chances of moving up the ladder. income and lead more to downward mobility. The children of immigrants have on average a higher probability of achieving upward mobility, but also have a higher probability of remaining in the lowest fifth of income. These differences are linked in particular to the place of birth of the parents: children whose parent with the highest income was born in Asia, for example, have the highest probability of upward mobility.

Who moves up the income ladder relative to their parents?