What is intergenerational income mobility in simple terms?

It is how likely children of rich or poor parents are to end up rich or poor themselves.

What is the Great Gatsby curve?

A graph showing that countries with higher income inequality tend to have lower intergenerational mobility.

Intergenerational Income Mobility

📈 Economics By CampusDown Wiki Editorial Team Last updated October 27, 2026

Intergenerational income mobility describes how far parents' income determines their children's adult income, or how likely children are to move up from where they started. Low mobility means economic status is passed down; high mobility means people can move regardless of origin.

Contents

1. Concept and measurement
2. Theoretical explanations
3. International comparison and the Great Gatsby curve
4. FAQ
5. References

Concept and measurement

The standard measure is the intergenerational income elasticity (IGE): the percentage difference in children's income associated with a 1 percent difference in parents' income, where 0 means full mobility and 1 full persistence. Solon (1992) showed that single-year incomes bias mobility upward and estimated a US elasticity of at least 0.4. Rank-rank correlations are also widely used (Solon, 1999; Black & Devereux, 2011).

Theoretical explanations

Becker and Tomes (1979) explained persistence through parental investment in children's human capital and the transmission of endowments. Credit constraints may keep poor parents from investing enough, producing a poverty trap, while the Matthew effect compounds early advantage. Public investment in schools, childcare and neighbourhoods can offset this.

International comparison and the Great Gatsby curve

Björklund and Jäntti (1997) found higher mobility in Sweden than in the United States. Corak (2013) popularised the Great Gatsby curve: more unequal countries tend to have lower mobility. Chetty et al. (2014) used tax records to show large regional differences in US mobility, associated with segregation, school quality, family structure and social capital. Correlation is not causation, and estimates vary with data and methods.

FAQ

What is intergenerational income mobility in simple terms?: It is how likely children of rich or poor parents are to end up rich or poor themselves.
What is the Great Gatsby curve?: A graph showing that countries with higher income inequality tend to have lower intergenerational mobility.

Sources reviewed: 2026-10-26

References

Becker, G. S., & Tomes, N. (1979). An equilibrium theory of the distribution of income and intergenerational mobility. Journal of Political Economy, 87(6), 1153–1189. The theoretical model of intergenerational transmission through parental investment.
Solon, G. (1992). Intergenerational income mobility in the United States. American Economic Review, 82(3), 393–408. Corrected estimates showing US elasticity of at least 0.4.
Solon, G. (1999). Intergenerational mobility in the labor market. In O. Ashenfelter & D. Card (Eds.), Handbook of labor economics (Vol. 3A, pp. 1761–1800). Elsevier. A handbook review of measurement and evidence.
Black, S. E., & Devereux, P. J. (2011). Recent developments in intergenerational mobility. In O. Ashenfelter & D. Card (Eds.), Handbook of labor economics (Vol. 4B, pp. 1487–1541). Elsevier. Recent developments, including causal studies.
Corak, M. (2013). Income inequality, equality of opportunity, and intergenerational mobility. Journal of Economic Perspectives, 27(3), 79–102. The Great Gatsby curve linking inequality and immobility.
Chetty, R., Hendren, N., Kline, P., & Saez, E. (2014). Where is the land of opportunity? The geography of intergenerational mobility in the United States. The Quarterly Journal of Economics, 129(4), 1553–1623. Tax data revealing large regional differences in US mobility.
Björklund, A., & Jäntti, M. (1997). Intergenerational income mobility in Sweden compared to the United States. American Economic Review, 87(5), 1009–1018. Compares mobility in Sweden and the United States.

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This article was last updated on October 27, 2026. It is based on widely recognized original works and textbooks; when citing it in a paper, please check the original sources listed in the references.