And Yet, It Moves: Intergenerational Mobility in Italy Paolo Acciari - - PowerPoint PPT Presentation

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And Yet, It Moves: Intergenerational Mobility in Italy Paolo Acciari - - PowerPoint PPT Presentation

Jan 07, 2024 393 likes •1.01k views

And Yet, It Moves: Intergenerational Mobility in Italy Paolo Acciari Ministero dellEconomia e delle Finanze Alberto Polo New York University Gianluca Violante Princeton University XIX European Conference - fRDB

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SLIDE 1

’And Yet, It Moves’: Intergenerational Mobility in Italy

Paolo Acciari Ministero dell’Economia e delle Finanze Alberto Polo New York University Gianluca Violante Princeton University XIX European Conference - fRDB

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 2

Intergenerational Mobility: A Definition

  • Intergenerational mobility refers to the degree to which individual

socio-economic outcomes are associated with the outcomes and characteristics of their parents

  • Stronger association → lower intergenerational mobility
  • In our study: outcome = income

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 3

Intergenerational Mobility: An Example

Child Income

0.5 1 1.5 2 2.5

Distribution of Child Income

Parental Income

0.5 1 1.5 2 2.5

Distribution of Parental Income

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 4

Intergenerational Mobility: An Example

Child Income

0.5 1 1.5 2 2.5

Distribution of Child Income

Parental Income

0.5 1 1.5 2 2.5

Distribution of Parental Income

Silvio Tiziano

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 5

Intergenerational Mobility: An Example

Child Income

0.5 1 1.5 2 2.5

Distribution of Child Income

Parental Income

0.5 1 1.5 2 2.5

Distribution of Parental Income

Silvio Tiziano

Tiziano → Matteo Silvio → Marina

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 6

Intergenerational Mobility: An Example

Child Income

0.5 1 1.5 2 2.5

Distribution of Child Income

Parental Income

0.5 1 1.5 2 2.5

Distribution of Parental Income

Silvio Tiziano Matteo Marina

A society with low (upward and downward) mobility

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 7

Intergenerational Mobility: An Example

Child Income

0.5 1 1.5 2 2.5

Distribution of Child Income

Parental Income

0.5 1 1.5 2 2.5

Distribution of Parental Income

Silvio Tiziano Matteo Marina

A society with high (upward and downward) mobility

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 8

The Study of Intergenerational Mobility (IGM)

  • Why is measuring intergenerational mobility interesting?

◮ IGM is considered an indicator of a fluid and equitable society ◮ Stagnant economy → immobile society? ◮ Only few country-studies based on large administrative data

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 9

The Study of Intergenerational Mobility (IGM)

  • Why is measuring intergenerational mobility interesting?

◮ IGM is considered an indicator of a fluid and equitable society ◮ Stagnant economy → immobile society? ◮ Only few country-studies based on large administrative data

  • We use administrative records on tax returns to measure

intergenerational income mobility for two recent cohorts of Italians ◮ First study using direct measures of income for Italy ◮ Existing studies, so far, have mostly focused on education and

  • ccupation as measures of ‘status’, or imputed income

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 10

Outline

  • 1. Description of the data
  • 2. Define measures of intergenerational mobility (IGM)
  • 3. Results

(a) National statistics (b) IGM in Italy compared to other countries (c) Geographical variation across Italian provinces (d) Ask what socio-economic variables correlate with IGM

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 11

DATA

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 12

What made this study possible

9 1

F AMIL IAR I A CAR ICO

REDDITI FAM ILIARI A CARICO QUADRO RP Oneri e spese

1

C Codice fiscale

  • N. mesi

Percentuale di (Indicare il codice fiscale del coniuge anche se non fiscalmente a carico) a carico detrazione spettante Relazione di parentela

3 2

F F F F F F F A A A A A A A

5 6 7 4 8

MINISTERO DELLE FINANZE

Modello Unificato Compensativo periodo d’imposta 1998

UNICO 99

Persone fisiche

  • Mod. N.

CODICE FISCALE

  • riginale

We can link SSN of parents and children from tax returns

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 13

Sample Selection

  • Parents aged 40-55 in 1998 and their children aged 35-40 in 2012
  • 650,000 parents-children records
  • For each cohort, information on income for 2 consecutive years

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 14

Sample Selection

  • Parents aged 40-55 in 1998 and their children aged 35-40 in 2012
  • 650,000 parents-children records
  • For each cohort, information on income for 2 consecutive years
  • Two shortcomings of these data:
  • 1. Noisy proxy for individual lifetime income
  • 2. Tax evasion

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 15

Sample Selection

  • Parents aged 40-55 in 1998 and their children aged 35-40 in 2012
  • 650,000 parents-children records
  • For each cohort, information on income for 2 consecutive years
  • Two shortcomings of these data:
  • 1. Noisy proxy for individual lifetime income
  • 2. Tax evasion

→ our estimates could overstate the true level of mobility

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 16

Descriptive statistics

Parents in 1998 Father’s age 51 Mother’s age 48 % Families top-earner = father 87.5% Parental income 34,633 Father’s income 26,473 Mother’s income 11,642 Children in 2012 Age 37 Son’s income 25,016 Daughter’s income 18,290 % for whom major income component is: Dependent labor 72% Entrepreneurship 14% Self-employment 10% Capital 4%

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 17

INDICATORS OF INTERGENERATIONAL MOBILITY

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 18

Two Types of Indicators

  • 1. Absolute Upward Mobility
  • It measures how easy it is, for children who grew up in poor

families, to improve their position in the income distribution

  • Indicator of a fluid society

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 19

Two Types of Indicators

  • 1. Absolute Upward Mobility
  • It measures how easy it is, for children who grew up in poor

families, to improve their position in the income distribution

  • Indicator of a fluid society
  • 2. Relative Mobility
  • It measures the gap in the likelihood of economic success

across children with different family background

  • Indicator of equal opportunities in society

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 20

Upward Mobility Index (Q1Q5)

  • Take children from parents at the bottom of the distribution
  • Ask: how many of them will reach the top of the distribution?

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 21

Upward Mobility Index (Q1Q5)

  • Take children from parents at the bottom of the distribution
  • Ask: how many of them will reach the top of the distribution?
  • Climb from lowest quintile (Q1) to highest quintile (Q5)

◮ Bottom quintile (lowest 20%): father earns less than e15,000 ◮ Top quintile (highest 20%): child earns more than e50,000

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 22

Upward Mobility Index (Q1Q5)

  • Take children from parents at the bottom of the distribution
  • Ask: how many of them will reach the top of the distribution?
  • Climb from lowest quintile (Q1) to highest quintile (Q5)

◮ Bottom quintile (lowest 20%): father earns less than e15,000 ◮ Top quintile (highest 20%): child earns more than e50,000

  • It’s the fraction of children who come from poor families, but as

adults become well-off (some of them affluent)

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 23

Relative Mobility

Parental Income Rank

20 40 60 80 100

Child Income Rank

20 40 60 80 100

Mean Child Rank vs. Parental Rank

Each percentile contains 1 percent of the population

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 24

Relative Mobility

Parental Income Rank

20 40 60 80 100

Child Income Rank

20 40 60 80 100

Mean Child Rank vs. Parental Rank

For each parental percentile, collect positions of their children

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 25

Relative Mobility

Parental Income Rank

20 40 60 80 100

Child Income Rank

20 40 60 80 100

Mean Child Rank vs. Parental Rank Relative rank persistence: the slope of the red line

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 26

Relative Rank Persistence

Parental Income Rank

20 40 60 80 100

Child Income Rank

20 40 60 80 100

Mean Child Rank vs. Parental Rank

Maximum Relative Mobility

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 27

Relative Rank Persistence

Parental Income Rank

20 40 60 80 100

Child Income Rank

20 40 60 80 100

Mean Child Rank vs. Parental Rank

Minimum Relative Mobility Maximum Relative Mobility

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 28

Relative Rank Persistence

Parental Income Rank

20 40 60 80 100

Child Income Rank

20 40 60 80 100

Mean Child Rank vs. Parental Rank

Maximum Relative Mobility Minimum Relative Mobility

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 29

Comparison between Regions/Countries

Parental Income Rank 20 40 60 80 100 Child Income Rank 20 40 60 80 100 A more egalitarian than B Region A Region B

Flatter line → more relative mobility → egalitarian society

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 30

Comparison between Regions/Countries

Parental Income Rank 20 40 60 80 100 Child Income Rank 20 40 60 80 100 A more egalitarian than B Region A Region B Parental Income Rank 20 40 60 80 100 Child Income Rank 20 40 60 80 100 A more upward mobile than B

Flatter line → more relative mobility → egalitarian society Higher line → more absolute mobility → upward mobile society

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 31

NATIONAL STATISTICS

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 32

Upward Mobility in Italy (Q1Q5)

  • Fraction of children from families in bottom quintile (less than

e15,000) moving up to top quintile (more than e50,000)

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 33

Upward Mobility in Italy (Q1Q5)

  • Fraction of children from families in bottom quintile (less than

e15,000) moving up to top quintile (more than e50,000) Child Quintile Parental Quintile 1st 2nd 3rd 4th 5th 1st 27 26 21 16 10 2nd 21 23 23 19 14 3rd 19 20 21 22 18 4th 17 17 20 23 23 5th 15 14 15 21 35

  • Only 10 children out of 100 born from poor parents make it to top
  • As a comparison, 35 out of 100 born at the top stay at the top

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 34

Subgroups of the population

  • We find that upward mobility is:

◮ Higher for sons compared to daughters ◮ Higher for first-born among siblings ◮ Higher for children of foreign-born parents

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 35

Subgroups of the population

  • We find that upward mobility is:

◮ Higher for sons compared to daughters ◮ Higher for first-born among siblings ◮ Higher for children of foreign-born parents ◮ Higher for children who, once adults, migrate from the province where they grew up → geographical mobility begets upward mobility

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 36

Relative Rank Persistence in Italy

Parental Income Rank

20 40 60 80 100

Child Income Rank

30 40 50 60 70

Mean Child Rank vs. Parental Rank

  • Linear relationship, but it bends upward at the top
  • More rank-persistence at the top (above 95th pct: e100,000)

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 37

Relative Rank Persistence in Italy

Parental Income Rank

20 40 60 80 100

Child Income Rank

30 40 50 60 70

Mean Child Rank vs. Parental Rank

  • A straight line approximates well the data

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 38

Relative Rank Persistence in Italy

Parental Income Rank

20 40 60 80 100

Child Income Rank

20 40 60 80 100

Mean Child Rank vs. Parental Rank

Italy Minimum Relative Mobility Maximum Relative Mobility

  • Slope = 0.23: parents distant 90-10 → children distant 60-40
  • Initial income gap narrows significantly, but remains noticeable

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 39

INTERNATIONAL COMPARISON

Italy vs United States and Sweden

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 40

Upward Mobility Across Countries

  • Q1Q5: fraction of children rising from bottom to top quintile

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 41

Upward Mobility Across Countries

  • Q1Q5: fraction of children rising from bottom to top quintile

◮ Italy: 10% ◮ United States: 8% ◮ Sweden: 11%

  • Are they really so similar? What’s going on?

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 42

Upward Mobility Across Countries

  • Q1Q5: fraction of children rising from bottom to top quintile

◮ Italy: 10% ◮ United States: 8% ◮ Sweden: 11%

  • Are they really so similar? What’s going on?
  • Income inequality in US is much higher than in Italy and Sweden

→ distributional ranks are further apart in monetary terms

  • Using positional mobility measures in cross-country comparisons

can be problematic

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 43

Upward Mobility: Italy vs United States

  • Probability that son’s income is 50 pct higher than father’s income

Parental Income Rank

20 40 60 80 100

Probability

0.2 0.4 0.6 0.8 1

Probability of 50% Upward Transition

Italy US

  • In Italy: more upward mobility at the bottom, but less for the

middle class, compared to the United States

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 44

Relative Mobility Across Countries

Parental Income 20 40 60 80 100 Child Income 30 35 40 45 50 55 60 65 70 United States = 0.34 Italy = 0.23 Sweden = 0.19

  • Sweden is the most egalitarian and the US the least
  • Italy is in between

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 45

GEOGRAPHICAL VARIATION IN INTERGENERATIONAL MOBILITY

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 46

Variation in Upward Mobility Across Provinces

  • Take two children born from parents in the same position of the

national income distribution...

  • ...but residing in different provinces when their children grew up
  • What is the position of the children in their own national income

distribution, when they become adults?

  • Attempt to isolate the impact of growing up in a particular province

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 47

Upward Mobility Across Italian Provinces

(.213,.389] (.195,.213] (.163,.195] (.128,.163] (.097,.128] (.083,.097] (.075,.083] (.064,.075] [.042,.064]

Darker colors mean more mobility

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 48

Interpretation

Parental Income Rank

20 40 60 80 100

Child Income Rank

20 40 60 80 100

Mean Child Rank vs. Parental Rank

South North South North North South

  • For given parental rank, some of the variation in child outcome is

explained by the province where she grew up

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 49

Top-10 and Bottom-10 Provinces

Rank Top 10 Q1Q5 Rank Bottom 10 Q1Q5 1 Bolzano 0.389 101 Cosenza 0.061 2 Lecco 0.273 102 Olbia - Tempio 0.060 3 Monza-Brianza 0.252 103 Trapani 0.059 4 Milano 0.241 104 Medio Campidano 0.058 5 Mantova 0.233 105 Vibo Valentia 0.057 6 Varese 0.227 106 Palermo 0.055 7 Cremona 0.223 107 Carbonia - Iglesias 0.053 8 Bologna 0.222 108 Nuoro 0.053 9 Como 0.221 109 Agrigento 0.048 10 Aosta 0.217 110 Oristano 0.042 Probability of climbing from the bottom to the top of income distribution

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 50

Large Provinces (around 1M residents or more)

Rank Q1Q5 Rank Q1Q5 1 Milano 0.241 10 Firenze 0.135 2 Bologna 0.222 11 Roma 0.125 3 Brescia 0.213 12 Napoli 0.086 4 Treviso 0.212 13 Caserta 0.076 5 Bergamo 0.210 14 Bari 0.071 6 Verona 0.201 15 Salerno 0.068 7 Padova 0.197 16 Catania 0.065 8 Genova 0.166 17 Cosenza 0.061 9 Torino 0.161 18 Palermo 0.055 Probability of climbing from the bottom to the top of income distribution

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 51

Where Would You Want to Grow Up?

Parental Income Rank

20 40 60 80 100

Child Income Rank

30 40 50 60 70

Mean Child Income Rank vs. Parental Income Rank

Milano Bari

Milano vs Bari

  • Milano is both more egalitarian (flatter line) and more upward

mobile (higher line) than Bari

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 52

Socio-Economic Factors Associated with Mobility

  • Upward mobility varies dramatically across provinces
  • Also many key socio-economic indicators vary across provinces
  • Which ones are more strongly associated with upward mobility?

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 53

Socio-Economic Factors Associated with Mobility

  • Upward mobility varies dramatically across provinces
  • Also many key socio-economic indicators vary across provinces
  • Which ones are more strongly associated with upward mobility?
  • 1. Local labor market conditions

◮ i.e., youth unemployment

  • 2. Indicators of school quality
  • 3. Social capital

◮ i.e., measures of trust, reciprocity, cooperation

  • 4. Self-efficacy (individual empowerment) among children

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 54

Indicators of School Quality

  • Tuttoscuola report (2007): over 100 indicators of school quality

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 55

Indicators of School Quality

  • Tuttoscuola report (2007): over 100 indicators of school quality
  • 4 areas: resources, organization, teachers, and test scores
  • 1. Teachers’ composition and working conditions

◮ Share of young teachers (+), share of temporary (precari) teachers (-), turnover rate (-)

  • 2. Test scores

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 56

Indicators of School Quality

  • Tuttoscuola report (2007): over 100 indicators of school quality
  • 4 areas: resources, organization, teachers, and test scores
  • 1. Teachers’ composition and working conditions

◮ Share of young teachers (+), share of temporary (precari) teachers (-), turnover rate (-)

  • 2. Test scores
  • 4 school levels: kindergarten, primary, middle, and secondary
  • 1. Quality of kindergarten

◮ Consistent with literature stressing importance of childhood development for economic outcomes of adults

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 57

Conclusions

  • 1. Intergenerational mobility in Italy may be higher than we thought
  • 2. But very low at the top of distribution, where ranks persist more
  • 3. In terms of relative mobility, Italy is between Scandinavia and US

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 58

Conclusions

  • 1. Intergenerational mobility in Italy may be higher than we thought
  • 2. But very low at the top of distribution, where ranks persist more
  • 3. In terms of relative mobility, Italy is between Scandinavia and US
  • 4. Striking geographical differentials between North and South
  • North-East: land of abundant and equal opportunities
  • South: land where social status persists across generations

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

slide-59
SLIDE 59

Conclusions

  • 1. Intergenerational mobility in Italy may be higher than we thought
  • 2. But very low at the top of distribution, where ranks persist more
  • 3. In terms of relative mobility, Italy is between Scandinavia and US
  • 4. Striking geographical differentials between North and South
  • North-East: land of abundant and equal opportunities
  • South: land where social status persists across generations
  • 5. Correlates → policy prescriptions:
  • Improving quality of schooling
  • Improving youth access to labor market

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”

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SLIDE 60

THANKS!

Acciari-Polo-Violante, ”Intergenerational Mobility in Italy”