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Maximilian Stockhausen in Journal of Economic Inequality External Publication 17. August 2021 Like father, like son?: A comparison of absolute and relative intergenerational labour income mobility in Germany and the US

Are children better off than their parents? This highly debated question in politics and economics is investigated by analysing the trends in absolute and relative intergenerational labour income mobility for Germany and the US.

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A comparison of absolute and relative intergenerational labour income mobility in Germany and the US
Maximilian Stockhausen in Journal of Economic Inequality External Publication 17. August 2021

Like father, like son?: A comparison of absolute and relative intergenerational labour income mobility in Germany and the US

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German Economic Institute (IW) German Economic Institute (IW)

Are children better off than their parents? This highly debated question in politics and economics is investigated by analysing the trends in absolute and relative intergenerational labour income mobility for Germany and the US.

High quality panel data is used for this purpose; the SOEP for Germany and the PSID for the US. In Germany, 67% of sons born between 1955 and 1975 earned a significantly higher real long-run labour income than their fathers. Those with fathers from the lowest earnings bracket were particularly mobile in absolute terms. In contrast, the fraction of US sons earning more than their fathers is 60% on average for the same cohorts. Their share decreased from 66% in the 1956–60 birth cohort to 48% in the 1971–75 birth cohort, while it changed very little in Germany. Overall, absolute as well as relative labour income mobility is larger in Germany than in the US. This indicates that economic growth has been distributed more broadly in Germany than in the US. While the majority of German males has been able to share in the country’s rising prosperity and are better off than their fathers, US males continue to lose ground. Hence, Chetty et al. (Science 356:398–406, 2017) seem to be right when they say that the American Dream is slowly fading away.

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A comparison of absolute and relative intergenerational labour income mobility in Germany and the US
Maximilian Stockhausen in Journal of Economic Inequality External Publication 17. August 2021

Like father, like son?: A comparison of absolute and relative intergenerational labour income mobility in Germany and the US

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German Economic Institute (IW) German Economic Institute (IW)

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Michael Hüther / Judith Niehues External Publication 8. June 2022

Perception and Reality: Inequality and Unemployment in Germany

Data for the time before the corona pandemic reveal a largely positive picture of the economic and social development in Germany. Most individuals perceived their own situation as very positive, but their views on society are rather pessimistic and overly ...

IW

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Judith Niehues / Maximilian Stockhausen IW-Trends No. 2 16. May 2022

A Focus on the Middle Class - Demarcation, Development and Mobility

In 2018, roughly every second German was a member of the middle class as measured by income, a proportion which has barely changed for more than a decade. However, the lower income threshold of this middle-income group has risen - an indication of increased ...

IW

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