A large body of literature has shown that the outcomes of children are tied to the outcomes of their parents or, in other words, that children face different life prospects based on their family background. But there is no reason to believe that such “persistence” of outcomes is limited to two generations. Social mobility (or lack thereof) depends not just on how parents influence the outcomes of their children, but also on how outcomes persist across multiple generations, from grandparents to grandchildren.
Patterns of intergenerational income mobility in the United States reveal valuable lessons for economists and policy makers not just in this country, but also for the developing world, where successful efforts to promote shared prosperity and foster create better prospects for youth and children too often meet with frustration.
Raj Chetty, Professor of Economics at Harvard University lectured on this topic recently at the World Bank. For his talk, Chetty drew on recent research by him, Nathaniel Hendren, Patrick Kline and Emmanuel Saez. Chetty and team analyzed anonymous tax records on earnings of 40 million US children and their parents to gauge a child's chances of moving up the income distribution relative to his or her parents.