Intergenerational Economic Mobility in the U.S., 1940 to 2000

We estimate a time series of intergenerational economic mobility using a two sample estimation approach that matches individuals in the Census to synthetic parents in the prior generation based on state of birth and cohort. We find that mobility increased from 1950 to 1980 but has declined sharply since 1980. While our estimator places greater weight on birth location effects than the standard intergenerational coefficient, evidence suggests that the size of the bias is small and unlikely to account for the sharp change since 1980. The recent decline in mobility is only partially explained by education. Our preferred set of results suggest that the rate at which earnings are regressing to the mean is slower now than at any time in the post World War II period causing economic differences between families to persist longer than they had mid-century. However, current rates of positional mobility, as measured by the intergenerational correlation, appear historically normal.