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Paper No' CEEDP0026: | Full paper
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This Paper is published under the following series: CEE Discussion Papers
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Abstract:This paper flatly contradicts the common view that anyone can make it in modern Britain. Indeed, rather then weakening, the link between an individual's earnings and those of his or her parents has strengthened. An important part of the explanation is that the expansion of higher education has benefited people from rich families much more than those from poor families. The extent of intergenerational mobility is frequently seen as a measure of the degree of equality of opportunity in society and considerable research has been devoted to obtaining an accurate estimate of it for a number of countries. However little is known about how these connections have altered through time. Sharp increases in educational attainment and rises in earnings (and living standards in general) in more recent generations mean that many observers seem to think that we now live in a more mobile, meritocratic society than in the past. Contrary to this, this research seems to show that where you come from matters more now than in the past. It appears that the extent of intergenerational mobility has actually fallen. The research uses unique data that follow two cohorts of children (one born in 1958, one born in 1970) through childhood and into adulthood. The latest data, collected in 2000, make it possible, for the first time, for researchers to get a good measure of the adult earnings of the second cohort.
The key findings are: The connection between earnings and parental income has strengthened for the more recent cohort. Estimates of the relationship between childhood family income and son's adult earnings show that for the 1958 cohort, a son from a family with twice as much income as a second family will earn about 12 percent more in his early thirties than a son from the second family. In the 1970 cohort, the same figure is 25 percent. Therefore, the degree of intergenerational transmission has risen by 13 percentage points. Results for daughters are very similar;  Part of the fall in mobility across generations is due to the fact that the expansion of the higher education system has benefited people from rich fa milies much more than those from poor families. This is particularly the case for daughters. The results show that differences in educational attainment across family background have led to a decline in equality of opportunity. This is despite the large expansion in postcompulsory schooling that occurred between the two cohorts. This may be unexpected to some observers, who see great gains in education and earnings from one generation to another and leave the story there. - But these gains have been unequally distributed across society. The majority of beneficiaries have been children from families who were already doing well. If, as seems to have happened, able children from lower income families are excluded from the expansion of education, this will lower national productivity and income in the long run. The implication for government policy is clear. If equality of opportunity is a serious goal of government, it can be facilitated in a way that can enhance economic welfare via policies directed at high ability children whose parents are doing less well.
This paper has been published as:
Jo Blanden, Alissa Goodman, Paul Gregg and Stephen Machin, Chapter 6: 'Changes in Intergenerational Mobility in Britain' in Miles Corak (ed.), Generational Income Mobility in North America and Europe, Cambridge University Press, 2004, pp:122-146.
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