Educational Expansion, Earnings Compression and Changes in Intergenerational Economic Mobility : Evidence from French Cohorts, 1931-1976

Friday, July 18, 2014: 4:45 PM
Room: Booth 42
Distributed Paper
Arnaud LEFRANC , Thema, Université de Cergy-Pontoise, Cergy-Pontoise, France
Over the last fifteen years, an important body of research has investigated the extent of the intergenerational economic mobility. Two main results have emerged from this literature. First, economic outcomes, in developed societies, are much more strongly influenced by family background than was thought two decades ago. Second, the transmission of economic inequality varies considerably across countries and high inequality is generally associated with low mobility. However, beyond the above-mentioned stylized facts, the factors that shape intergenerational economic mobility empirically have not been much explored. Why does the degree of intergenerational mobility vary across countries ? To what extent does it change over time ? How does the level of economic inequality relate to the persistence of inequality across generations ? Have changes in the wage structure affected the degree of mobility ? What policy intervention in general, and what features of the educational system in particular, may foster equality of opportunity ? Such important questions remain largely unanswered.

This paper analyzes long-term trends in intergenerational earnings mobility in France. I estimate intergenerational earnings elasticities for male cohorts born between 1931 and 1975. This time period has witnessed important changes in the labor market and educational system : large expansion in access to secondary and higher education, important compression of earnings differentials. Over the period, intergenerational earnings mobility exhibits a V-shaped pattern. Mobility falls between cohorts born in the mid 1930s and those born in the mid 1950s, but subsequently rises. For cohorts born in the first half of the 1970s, age-adjusted intergenerational earnings elasticity amount to around .55. This is significantly higher than the elasticity estimated for the baby boom cohorts. It is also lower than tcohorts born in the 1930s but the difference is not significant. Changes in mobility mostly reflects the evolution of cross-section earnings inequality, rather than variations in positional mobility.