What the Mean Measures of Mobility Miss : Learning About Intergenerational Mobility From Conditional Variance
To understand the role of family background in intergenerational mobility, a large literature has focused on the conditional mean of children's economic outcomes given parent's economic status, while ignoring the information contained in...
| Main Authors: | , , , |
|---|---|
| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2022
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/099056206072213120/IDU0a33a06520651b040c20ab87017530886e214 http://hdl.handle.net/10986/37517 |
| Summary: | To understand the role of family
background in intergenerational mobility, a large literature
has focused on the conditional mean of children's
economic outcomes given parent's economic status, while
ignoring the information contained in conditional variance.
This paper explores the effects of family background on the
conditional variance of children's outcomes in the
context of intergenerational educational mobility using data
from three large developing countries (China, India, and
Indonesia). The empirical analysis uses exceptionally rich
data free of sample truncation because of the nonresident
children at the time of the survey. Evidence from all three
countries suggests a strong influence of father's
education on the conditional variance of children's
schooling. The analysis finds substantial heterogeneity
across countries, gender, and geography (rural/urban).
Cohort-based estimates suggest that the effects of
father's education on the conditional variance have
changed qualitatively; in some cases, a positive effect in
the 1950s cohort turns into a substantial negative effect in
the 1980s cohort. A methodology is developed to incorporate
the effects of family background on the conditional variance
along with the standard conditional mean effects. This paper
derives risk-adjusted measures of relative and absolute
mobility by accounting for an estimate of the risk premium
for the conditional variance faced by a child. The estimates
of risk-adjusted relative and absolute mobility for China,
India, and Indonesia suggest that the existing evidence
using the standard measures of mobility substantially
underestimates the effects of family background on
children's educational opportunities, and thus gives a
false impression of high educational mobility. The magnitude
of underestimation is especially large for the children born
into the most disadvantaged households where fathers have no
schooling, while it is negligible for the children of
college educated fathers. The standard (but partial)
measures may lead to an incorrect ranking of regions and
groups in terms of relative mobility. Compared to the
risk-adjusted measures, the standard measures are likely to
underestimate the gender gap and rural-urban gap in
educational opportunities. |
|---|