Gender differences in intergenerational income mobility
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School of Business |
Master's thesis
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Date
2024
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Mcode
Degree programme
Economics
Language
en
Pages
41
Series
Abstract
Equality of opportunity remains a much-discussed topic in modern societies worldwide. The ideal state in which the socio-economic outcome of a person is independent of their background remains evasive even in countries that take pride in providing equal opportunities. Children from socio- economically disadvantaged families grow up to earn less than children from wealthier families, and this has negative consequences both from the individual and economic perspectives. Intergenerational income mobility refers to the association of incomes between two generations. In other words, it tells us how closely the life-time incomes of children are tied to those of their parents. In this paper, we will be focusing on intergenerational income mobility from the perspective of gender differences. Through a literature review, we will examine how intergenerational income mobility works in economic theory, how the theory can explain differences in mobility between women and men, what kind of findings empirical research has on these differences. From the theoretical framework of intergenerational income mobility, we find a few possible explanations for differences in mobility between women and men, both within and between countries. These are related to differences in educational systems, social norms, returns on investments in human capital, educational barriers, and labor markets. The way in which permanent income is estimated, is very important when measuring intergenerational income mobility. Women generally have lower labor force participation, making the use of individual income measures less accurate in depicting mobility for women. Family income allows us to observe the effects of assortative mating, through including the incomes of the spouse. This gives us a more accurate depiction of the economic status of both men and women. From the empirical literature covered here, we find women to have higher relative mobility than men in almost all of the countries compared. This is at least to some degree due to the use of individual income, as women have lower labor force participation in all countries observed here. The Nordics tend to exhibit higher levels of mobility, as well as lower differences between men and women compared to the other countries, especially to the US. Likely reasons behind this are the high degree of assortative mating in the US, and the high subsidies to public education in the Nordics. In Italy and Ethiopia, women exhibit lower absolute upward mobility. As for Italy, this is likely due to the exceptionally low female labor force participation. In Ethiopia, however, there are many possible explanations, including the lower educational attainment of women, higher degree of general poverty and more traditional gender values. For any further conclusions, more empirical research on the reasons behind the differences in mobility between women and men is needed. Even today, there are surprisingly few studies examining the differences in intergenerational mobility between women and men. With administrative data being more available today, intergenerational income mobility remains a promising field.Description
Thesis advisor
Sarvimäki, MattiKeywords
income mobility, income inequality, elasticity, intergenerational, mobility