Up and down the generational income ladder in Britain: Past changes and future prospects

Abstract

This article seeks evidence on trends in intergenerational income for cohorts born after 1970. As many of these cohorts have not yet joined the labour market, we must look at relationships between intermediate outcomes (degree attainment, test scores and non-cognitive abilities) and parental income to forecast forward from these to estimates of intergenerational earnings correlations. We find no evidence that the relationship between these intermediate outcomes and parental income have changed for more recent cohorts. Evidence from the earlier 1958 and 1970 cohorts shows that as mobility declined in the past the relationship between intermediate outcomes and parental income strengthened. We therefore conclude that, under realistic assumptions and in the absence of any significant unanticipated changes, the decline in intergenerational mobility that occurred between 1958 and 1970 birth cohorts is unlikely to continue for cohorts born from 1970 to 2000. Mobility is therefore likely to remain at or near the relatively low level observed for the 1970 birth cohort.