Do Poor Children Become Poor Adults? Lessons for Public Policy from a Cross Country Comparison of Generational Earnings Mobility

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IZA Seminar

Place: Schaumburg-Lippe-Str. 9, 53113 Bonn

Date: 28.09.2004, 12:15 - 13:30


Presentation by 

Miles Corak (CUNY Graduate Center)


In this paper I offer a cross country comparison of generational earnings mobility in order to understand the reasons for the degree to which the long run labour market success of children is related to that of their parents. Countries differ significantly in the extent to which family economic status is related to the labour market success of children in adulthood. A good deal of care, however, is needed in interpreting these correlations, and it is not clear they offer a target or menu for the conduct of policy. Two things are needed for this to be so: first, a sense of what equality of opportunity means, and second an understanding of the underlying causes. I discuss both of these issues and argue that: (1) money may well be important to the long run economic successful of children, but it is certainly not the only or most important factor; (2) the rewards to higher skilled / higher educated individuals in the labour market, and the opportunities for children to obtain the required skills and credentials are two important factors influencing the degree of generational mobility and the differences across countries; and as a result (3) income transfers to lower income individuals may be important to children in the here in now, but they should not be counted on to strongly promote generational mobility. Governments need to focus on investments in children to ensure that they have both the skills and opportunities to succeed in the labour market. Historically this has meant promoting access to higher and higher levels of education, but it is becoming increasingly important that attention be paid to pre-school and early childhood education. This shift in direction implies a conception of equality of opportunity that may have different degrees of support across the rich countries because it requires public policy to equalize the impact families have on the skills, beliefs, and motivation of their children.

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