This dissertation explores intergenerational mobility and inequality in the early twentieth century. The first chapter asks whether economic downturns increase or decrease mobility. I estimate the effect of the Great Depression on mobility, linking a sample of fathers before the Depression to their sons in 1940. I find that the Great Depression lowered intergenerational mobility for sons growing up in cities hit by large downturns. The effects are driven by differential, selective migration: the sons of richer fathers are able to move to better destinations. The second chapter compares historic rates of intergenerational mobility to today. Based on a sample matched from the Iowa 1915 State Census to the 1940 Federal Census, I argue that there was more mobility in the early twentieth century than is found in contemporary data, whether measured using intergenerational elasticities, rank-rank correlations, educational persistence, or occupational status measures. In the third chapter, I detail the machine learning method used to create the linked census samples used in chapters 1 and 2. I use a supervised learning approach to record linkage, training a matching algorithm on hand-linked historical data which is able to efficiently and accurately find links in noisy in historical data.

As the interest in Economics on inequality has exploded, intergenerational mobility is one of the fundamental areas concerning inequality since it is related to many normative questions such as equal opportunity and fairness. Despite its importance, research on measuring intergenerational mobility has received relatively little attention. The dominant approach is still the scalar-based regression approach, which employs a regression of some statistics of offspring on some statistics of parents. In connection with this issue, this dissertation introduces a novel measure for intergenerational mobility based on modern economic theory and empirically analyzes intergenerational mobility in the U.S. and Korea.The first chapter analyzes the empirical aspect of the relationship between parental income trajectory and a child's success in the U.S. using a novel approach, functional approach.In particular, we find that parental income when their children are in their late teens is more correlated with children's income in their early 30s. In addition, children whose parental income tends to increase in their late teens are more likely to have a higher economic position than their parents. This implies that upward income mobility is positively associated with the steadily increasing economic status of the family over the first 20 years of children's life. Investigated further are the effects on explaining a child's success of the role of other trajectories, such as the family structure of unemployment and job type of household head, and the impact of parental education level. We also investigate the association between parental income profile and their children's college attendance and derive a similar finding that late teens are crucial periods when parents' income has a more significant impact on children's educational success.While the first chapter addresses issues in intergenerational mobility in the U.S., the second chapter focuses on intergenerational mobility in Korea. In the second chapter, using a similar approach to Chapter 1, we analyze the intergenerational mobility in all three dimensions - income, education, and occupation. In addition, reflecting Korea's unique historical and social characteristics, we study the association between investment in private tutoring and a child's economic and educational success. Our findings highlight the importance of parental intervention in teens on a child's educational success. The pattern of parental income profile of the upward mobility group shows a stronger upward trend than that of the downward mobility group, similar to what we observe in the U.S. data in Chapter 1. In Korea, both upward and downward mobility groups show steadily increasing parental income trajectories, reflecting the rapid economic growth Korea has experienced over the last six decades. This interesting and unique finding of mobility patterns in Korea reveals various social and economic structural changes Korea has gone through.The third chapter studies the various methodological issues. In this chapter, we consider how our functional estimate can be varied by the fluctuation of measurement error in parental income. Using Beveridge-Nelson decomposition, we decompose parental income into permanent and transitory components and consider the transitory component as a measurement error. We also compare our estimation method with the methods based on the fixed basis approach. Using too many bases in this approach yields nonsensical estimates, while the estimates using too few bases strongly depend on the shape of the basis. We also find that the fixed basis approach is not robust to measurement error. A possible endogeneity issue is also studied in this chapter. Parental income can affect their children's success through two channels, transmission of human capital and providing financial resources. To focus on the effect of financial resources, we measure intergenerational income mobility using instrumental variables to control the effect of human capital.

Drawing from a 2014 Hoover Institution Conference on Inequality in honor of Gary Becker, a group of distinguished contributors explore various measures of inequality in America and address the issue of whether or not it is increasing. In looking at this question and examining policy implications, the authors draw on research on human capital and intergenerational mobility. The authors suggest that the emphasis on inequality and redistribution, while not wrong, is nevertheless misplaced, for it may lead us to adopt policies that will disrupt the progress we have made while doing nothing to promote the kind of growth that is essential to national progress.

The study of intergenerational mobility has a long history in the social sciences. Previous studies have proposed various mobility concepts, striven to overcome empirical barriers to achieve accurate national measures, and mapped out cross-country patterns and time trends of mobility. The three essays in dissertation contribute to a recent strand of this literature which seeks to understand the mechanisms through which social status is transmitted across generations. After an overall introduction in chapter one, chapter two uses recently published county-level data to study the determinants of intergenerational mobility, measured by income levels and teen birth rates. Following Solons mobility model, we study the impacts of public investment in human capital, returns to human capital, and taxation. The results show that better school quality and higher returns to education increase adult incomes and reduce teen birth rates for children from low income families. By comparing counties within or adjacent to metropolitan areas to other counties, this study finds that urban upward mobility is sensitive to parents' education while non-urban upward mobility is sensitive to migration opportunities.Chapter three employs court-ordered School Finance Reforms (SFRs) as quasi-experiments to quantify the effects of education equity on intergenerational mobility within commuting zones. First, I use reduced form difference-in-difference analysis to show that 10 years of exposure to SFRs increases the average college attendance rate by about 5.2% for children with the lowest parent income. The effect of exposure to SFRs decreases with parent income and increases with the duration of exposure. Second, to directly model the causal pathways, I construct a measure for education inequity based on the association between school district education expenditure and median family income. Using exposure to SFRs as the instrumental variable, 2SLS analysis suggests that one standard deviation reduction in education inequality will cause the average college attendance rate to increase by 2.2% for children at the lower end of the parent income spectrum. Placing the magnitudes of these effects in context, I conclude that policies aimed at increasing education equity, such as SFRs, can substantially benefit poor children but they alone are not enough to overcome the high degree of existing inequalities.Chapter four studies the Intergenerational Persistence of Self-employment in China across the Planned Economy Era. It finds that children whose parents were self-employed before Chinas socialist transformation were more likely to become self-employed themselves after the economic reform even though they had no direct exposure to their parents businesses. The effect is found in both urban and rural areas, but only for sons. Furthermore, asset holding data indicate that households with self-employed parents before the socialist transformation were more risk tolerant. These findings suggest that the taste for self-employment is an important conduit of parents effects on self-employment, and that the taste being transferred can be mapped to known entrepreneurial attitudes.

Proceedings of the Conference on Inequality in Memory of Gary Becker held September 25-26, 2014 at the Hoover Institution.

Americans like to believe that theirs is the land of opportunity, but the hard facts are that children born into poor families in the United States tend to stay poor and children born into wealthy families generally stay rich. Other countries have shown more success at lessening the effects of inequality on mobility—possibly by making public investments in education, health, and family well-being that offset the private advantages of the wealthy. What can the United States learn from these other countries about how to provide children from disadvantaged backgrounds an equal chance in life? Making comparisons across ten countries, Persistence, Privilege, and Parenting brings together a team of eminent international scholars to examine why advantage and disadvantage persist across generations. The book sheds light on how the social and economic mobility of children differs within and across countries and the impact private family resources, public policies, and social institutions may have on mobility. In what ways do parents pass advantage or disadvantage on to their children? Persistence, Privilege, and Parenting is an expansive exploration of the relationship between parental socioeconomic status and background and the outcomes of their grown children. The authors also address the impact of education and parental financial assistance on mobility. Contributors Miles Corak, Lori Curtis, and Shelley Phipps look at how family economic background influences the outcomes of adult children in the United States and Canada. They find that, despite many cultural similarities between the two countries, Canada has three times the rate of intergenerational mobility as the United States—possibly because Canada makes more public investments in its labor market, health care, and family programs. Jo Blanden and her colleagues explore a number of factors affecting how advantage is transmitted between parents and children in the United States and the United Kingdom, including education, occupation, marriage, and health. They find that despite the two nations having similar rates of intergenerational mobility and social inequality, lack of educational opportunity plays a greater role in limiting U.S. mobility, while the United Kingdom’s deeply rooted social class structure makes it difficult for the disadvantaged to transcend their circumstances. Jane Waldfogel and Elizabeth Washbrook examine cognitive and behavioral school readiness across income groups and find that pre-school age children in both the United States and Britain show substantial income-related gaps in school readiness—driven in part by poorly developed parenting skills among overburdened, low-income families. The authors suggest that the most encouraging policies focus on both school and home interventions, including such measures as increases in federal funding for Head Start programs in the United States, raising pre-school staff qualifications in Britain, and parenting programs in both countries. A significant step forward in the study of intergenerational mobility, Persistence, Privilege, and Parenting demonstrates that the transmission of advantage or disadvantage from one generation to the next varies widely from country to country. This striking finding is a particular cause for concern in the United States, where the persistence of disadvantage remains stubbornly high. But, it provides a reason to hope that by better understanding mobility across the generations abroad, we can find ways to do better at home.