TY - JOUR AU - Ichino,Andrea AU - Karabarbounis,Loukas AU - Moretti,Enrico TI - The Political Economy of Intergenerational Income Mobility JF - National Bureau of Economic Research Working Paper Series VL - No. 15946 PY - 2010 Y2 - April 2010 UR - http://www.nber.org/papers/w15946 L1 - http://www.nber.org/papers/w15946.pdf N1 - Author contact info: Andrea Ichino University of Bologna Dipartimento di Economia Piazza Scaravilli, 2 40126, Bologna - Italy E-Mail: andrea.ichino@unibo.it Loukas Karabarbounis University of Chicago Booth School of Business 5807 S. Woodlawn Avenue Chicago, IL 60637 Tel: 773/834-8327 E-Mail: loukas.karabarbounis@chicagobooth.edu Enrico Moretti University of California, Berkeley Department of Economics 549 Evans Hall Berkeley, CA 94720-3880 Tel: 510/642 6649 Fax: 510/643 7042 E-Mail: moretti@econ.berkeley.edu AB - The intergenerational elasticity of income is generally considered one of the best summary measures of the degree to which a society gives equal opportunity of success to all its members, irrespective of their family background. We present a parsimonious political economy model and show how the interaction between private and collective decisions determines the equilibrium level of mobility. Contrary to what it is generally assumed, a low correlation between father income and son income is not always desirable, as it may imply more inefficiency due to the distortionary effects of mobility-enhancing public policies. Moreover, taking into account the heterogeneity in preferences for intergenerational mobility leads to the conclusion that even if a fully mobile society is desirable ex ante, it may not be politically sustainable ex post. Our model clarifies the structural parameters behind the widely studied intergenerational elasticity of income in terms of political economy forces. Finally, we show some empirical evidence on the relationship between intergenerational elasticity of income across countries and its underlying determinants that is consistent with the predictions of the model. ER -