Intergenerational Income Mobility in Germany and the US

What is it about?

In line with existing results, the average intergenerational income elasticity in the US is significantly higher at 0.455 than in Germany at 0.316. While both countries feature similarly high intergenerational rank mobility, intergenerational income share mobility is higher in the US than in Germany. In terms of intergenerational income inequality, Germany shows both higher income mobility and stronger pro-poor growth than the US. Indications for a concave or convex curve of intergenerational income elasticity cannot be confirmed. In order to increase social mobility, the focus of education policy must be on equality of opportunity and preschool education has to be expanded. This solution is more incentive-compatible in the long term than a pure policy of redistribu-tion through taxes and transfers.

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