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Intergenerational income persistence within families

Chris Belfield, Claire Crawford, Ellen Greaves, Paul Gregg and Lindsey Macmillan
IFS Working Paper W17/11

There is substantial evidence of a significant relationship between parents’ income and sons’ earnings in the UK, and that this relationship has strengthened over time. We extend this by exploring a broader measure of net family income as an outcome. In doing so, we uncover three additional trends in social mobility. Partnership, and the level of earnings from any partner, are increasingly related to family background. The progressive direct tax and benefit system in the UK acts to offset intergenerational income persistence and has a stronger effect for the later cohort. Finally, men from higher-income backgrounds are significantly more likely than those from lower-income backgrounds to be in paid work and hence have higher incomes. Including out-of-work men in the analysis increases the estimates of
intergenerational income persistence.