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In thei study Mikael Lindahl and co-authors Adrian Adermon and Mårten Palme analyze how educational outcomes of the child generation are affected by the family members’ education, income and social status.
Photo: Juan Pablo Serrano Arenas
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Lower social mobility between generations than previously thought

Published

Inequality is passed on between generations to a greater extent than previously thought. A new study from The School of Business, Economics and Law, analyze how educational outcomes of the child generation are affected by the extended family members’ education, income and social status. The study is published in one of the world’s highest ranked economics journals, the American Economic Review.

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Portrait photo of Mikael Lindahl
Mikael Lindahl, professor in economics, University of Gothenburg.
Photo: Johan Wingborg

“We give a partly new picture of the role of social transmission, and point to a lower social mobility between generations than has previously been found. The success of an individual depends to a high degree on the family background, even in a country like Sweden, a society often viewed as having relatively high social mobility. However, we believe it is likely that our results can be generalized and thus that social mobility has been overestimated in general”, says Mikael Lindahl, who is a professor of economics at the University of Gothenburg, and just completed a three-year period as Söderberg professor at the School of Business, Economics and Law.

Looks at impact from
the extended family

Usually when researchers study how  socioeconomic success or failure (through attained education, income or social class) is transferred between generations, the focus is on the relationship between parents and children’s socioeconomic outcomes. But latent family background is difficult to measure. For instance, we then ignore the influence of the extended family, such as grandparents, cousins, aunts and more. In the study “Dynastic Human Capital, Inequality and Intergenerational Mobility”, Mikael Lindahl and co-authors Adrian Adermon and Mårten Palme analyze how educational outcomes of the child generation are affected by the family members’ education, income and social status.

 “Let’s assume that your relatives have on average 30 percent longer education than the typical extended family in Sweden. When you, as in earlier research, only take the parents into account, you see that on average this corresponds to approximately 10 percent longer education for the child. But in our study, we see that it corresponds to at least 15 percent longer education.”
In other words, we miss at least a third of the transmission of inequality between the generations due to family background if we do not take into account the extended family.

The success of an individual depends to a high degree on the family background, even in a country like Sweden, a society often viewed as having relatively high social mobility.

Inequality in Sweden has increased in the last 30–40 years and one thing that is often discussed in connection with this is how to think about good and bad inequality.

“Poor inequality can, a bit simplistic, be said to be that the life chances are to a too high degree determined by which family you are born into, instead of by individuals’ own efforts. We make an attempt to contribute to this issue by also performing a separate analysis for adopted children that grew up with their non-biological parents. We find that at least one-third of the transmission of inequality that is due to family background, stem from the childhood environment. It will continue to be important how to break the transmission of social disadvantage – but also to remember that it is very difficult to do that at a societal level”, says Mikael Lindahl.

A new way to
analyze social mobility

The study could be carried out thanks to Sweden's extensive population register, where information about distant relatives can be linked to each other several generations back in time. Mikael Lindahl believes that this unique data as well as the new method of studying the importance of family background were important reasons for the American Economic Review to accept the article for publication.

“We present a new way of analyzing social mobility, which is a classic research area in the social sciences. Our study also address a very current topic – the increasing income inequality in many countries since the 1980s”.

What does it mean for you as a researcher to be published in such a prestigious journal?

“Whether you like it or not, publications in the highest ranked journals are very important for researchers and departments. When younger researchers and colleagues assess the strength of a department, for example as a potential employer, the amount of top publications is important. Hopefully, this type of publications can therefore benefit the Department of Economics when it comes to attracting young talented researchers.”