How is intergenerational income mobility measured?
Intergenerational income mobility is measured by calculating the intergenerational earnings elasticity. A higher elasticity number implies that it is more difficult for a person to move outside the income class he or she was born into. There are large differences among peer countries. Canada ranks among the top performers and receives an “A” grade, with an intergenerational earnings elasticity of 0.19. If an individual earns $10,000 less income than the average, 19 per cent of that difference (or, $1,900) will be passed on to the individual’s children. In other words, the children will earn $1,900 less than the average. The most income mobility is found in Denmark, which has an intergenerational earnings elasticity of 0.15. This means that 15 per cent the relative difference in parental earnings is transmitted, on average, to their children. The U.K. is the worst performer on this indicator, with an earnings elasticity of 0.5. Parents earning $10,000 less than the average will pass on
