The traditional snapshot of parent-child income averages fails to capture the economic welfare that an individual can expect to have over a life span, the research suggests. In the past 50 years, Danish people have attained higher levels of education and have married and had children later in life. As their life, career, and educational trajectories have changed, their income profiles have changed too and now differ significantly from those of earlier generations, the study finds.
And the timing of parents’ ability to invest in their children’s lives matters. A number of studies, including some involving Heckman, have established that because early developmental skills are the foundation for later learning and skills, enriching activities in a child’s earliest years enhance lifetime prospects. This insight about timing, coupled with that about changing life-cycle dynamics, calls for an approach that goes beyond averaging incomes, the researchers argue.
The study demonstrates that despite government-sponsored social supports in Denmark, intergenerational dependence remains strong. And it argues that more accurate measures of parents’ expected lifetime resources and of parents’ capacity to invest in their children at crucial developmental ages offers a clearer picture of social mobility—and a better understanding how governments or other institutions can structure family supports to reduce inequality.
Further, other areas of a person’s life—such as a grade point average, educational attainment, participation in crime, and likelihood of a teenage pregnancy—may also be more closely tied to their parents’ resources than previously understood.
While the researchers find that intergenerational mobility is lower than previously calculated, they also argue that today’s children, especially those from affluent families, are still better off than their parents in absolute terms, because they gain more education and have greater access to credit.