Intergenerational Elasticity
Also known as: IGE, intergenerational income elasticity, intergenerational income persistence, father-son income elasticity
The intergenerational elasticity of income (IGE) is the workhorse measure of economic mobility: the regression coefficient from regressing a child's adult log income on the parent's log income. It expresses the percentage by which a child's expected income rises for each one-percent increase in parental income, so a higher IGE means income advantages and disadvantages are more strongly transmitted across generations and society is less mobile.
Key highlights
- Provides a single continuous, scale-free summary of intergenerational income persistence.
- Directly comparable across countries and over time, underpinning the Great Gatsby curve literature.
- Grounded in a simple, well-understood linear regression framework.
- Connects naturally to the intergenerational correlation and rank-based mobility measures.
Intuition
This section is available to Pro members. Upgrade to Pro
How it works
This section is available to Pro members. Upgrade to Pro
When to use it
Use the IGE when you have linked parent–child income data and want a continuous, internationally comparable measure of how strongly economic status is transmitted across generations. It is the standard tool of economic-mobility research and the basis for cross-country mobility comparisons. It requires good long-run income measures for both generations; with only a single year of parental income it is badly attenuated. It is less appropriate when status is categorical rather than continuous (use mobility tables), when only the child or only the parent generation is observed, or when the question concerns relative positional mobility, for which rank–rank slopes are preferable. It captures association, not the causal mechanisms of transmission.
Strengths & limitations
- Provides a single continuous, scale-free summary of intergenerational income persistence.
- Directly comparable across countries and over time, underpinning the Great Gatsby curve literature.
- Grounded in a simple, well-understood linear regression framework.
- Connects naturally to the intergenerational correlation and rank-based mobility measures.
- Highly sensitive to measurement error in parental income, which attenuates estimates unless multi-year averages are used.
- Subject to life-cycle bias when parent and child incomes are measured at non-comparable ages.
- Requires linked, long-run income data that are scarce, especially for both generations over many years.
- Assumes a roughly log-linear relationship; persistence can vary across the distribution, which a single slope hides.
Common pitfalls
This section is available to Pro members. Upgrade to Pro
Applications
This section is available to Pro members. Upgrade to Pro
Frequently asked
What is the difference between the IGE and the intergenerational correlation?
The IGE is the slope of child log income on parent log income, while the correlation standardizes that slope by the income dispersion of both generations. They coincide only when inequality is the same in both generations; when child-generation inequality is higher than parent-generation inequality, the IGE exceeds the correlation. Because the IGE conflates persistence with changes in inequality, many researchers also report the correlation or the rank–rank slope.
Why do single-year income measures bias the IGE downward?
A parent's income in any one year contains transitory fluctuations (a good or bad year) that are not part of their long-run economic position. Treating that noisy single year as the explanatory variable is classical measurement error, which attenuates the regression slope toward zero. Averaging income over several years removes much of the transitory noise and yields a larger, more accurate estimate of persistence.
Why are rank–rank measures sometimes preferred over the IGE?
Rank–rank slopes regress the child's income rank on the parent's income rank, which is robust to the skewness of income, handles zero and very low incomes gracefully, and is not distorted by differences in inequality across generations the way the IGE is. They have become standard in large administrative-data studies of mobility, though the IGE remains the classic elasticity-based measure.
Sources
- 1.Solon, G. (1992). Intergenerational income mobility in the United States. American Economic Review, 82(3), 393–408.
- 2.Black, S. E., & Devereux, P. J. (2011). Recent developments in intergenerational mobility. Handbook of Labor Economics (Vol. 4B, pp. 1487–1541). Elsevier. NBER Working Paper 15889.
You have read it. What now?
Cite this page
ScholarGate. (2026, June 22). Intergenerational Elasticity. ScholarGate. https://scholargate.app/sociology/intergenerational-elasticity