In this paper we first document the patterns across local labor markets and regions in Norway of cohorts born from the mid 1950s to the mid 1980s and around the age of 30 today, by leveraging an extensive and population wide register data connecting families and regions over time along outcome dimensions as income and education. We also document the development across regions and time along different margins of mobility, using different measures of intergenerational mobility, such as a relative measure as rank-rank which comprise both upward and downward mobility, the predicted rank for growing up poor and growing up rich (20 bottom and top parental percentile), and going from rags to riches, share of children going from bot-tom 20 percentile parental rank to the top 20 percentile, as well the share of sons with higher earnings than their fathers in order to measure welfare
improvements. We are in particular interested in the role of human capital in-vestments by parental background over time and across regions, and the role of the labor market opportunities for different socio-ecnomic groups across regions and over time, and we estimate the relationship between parental income rank and child educational attainment. We document this also for the bottom and top parental income percentile, and for different educational margins, high school, college, and postgraudate or master programs.
We find that the rank-rank correlation of gross earnings has remained remark-ably stable since the 1950s. It is about half as large as the association estimated by Chetty, Hendren, Kline, and Saez (2014) for the US. The time-trend is similar across the regions, however, income mobility has been persistently highest in the Western and Southern regions and lowest in the Eastern region.
Breakdowns by father’s earnings quintile show that while the mobility gap between the Western and Eastern regions is driven by differences in mobility at the bottom of father’s income distribution, there are differences at both the bottom and the top when comparing the Southern and Eastern regions.
Interstingly, we find that around 12-13 percent of children goes from the lowest to the highest quintile as a national average, and increasing over time.
There are large and quite stable differences across regions, again with the West as the most mobile from the bottom to the top, and the North and the Middle region with the lowest mobility. Moreover, we also find that for all regions, the share of sons making more money than their fathers, is high and increasing over time, again with the Western region with a higher share than the rest. We see some convergence over time, except for the East region. At the national level, the share of sons with higher earnings than their fathers starts out in the 50s cohort at around 70 percent similar to the US, but in stead of steadily going down as in the US, it increases to about 85 percent in
Norway. In contrast to the stability in the overall income mobility over time -although changes over time and across regions especially with mobility at the bottom, education mobility measured by strength of association between father’s income and child years of schooling has increased, especially sharply in the late 1950’s and early 1960’s - for the 1985 cohort it is very similar to Rothstein (2019)’s estimates for the US. While for the earliest cohorts there was a gap of nearly 2.5 years in the mean schooling of children of fathers in the top and bottom quintiles of the earnings distribution, for cohorts born in the late 70’s it was a full year smaller; further, the difference in the pro-portion of children completing high-school between the top and the bottom quintiles has nearly halved since the late 1950’s.As with income mobility, education mobility is persistently highest in the Western region and lowest in the Eastern region. The time-trend is similar across most of the regions with the North as the exception. It starts out as one of the most mobile regions in the 1950’s and 60’s, alongside the Western region and ends up as the second least mobile region by the 1980’s.We see the reverse pattern when looking at post graduate studies or master degree completion. Here mobility has, if anything, gone down over time and there has been little/no change in the difference in master degree completion rates between children of fathers in the top and bottom income quintiles. There is substantial regional varia-tion with big differences in mobility trends for post graduate complevaria-tion in Northern and Middle regions relative to the rest. The difference in trends is driven by differential trends at the top of parental income distribution rather than bottom. In order to assess the role of the labor market for human capital investments, we estimate returns to years of education in a simple Mincer equation framework. First, we notice that returns differ across regions, from close to zero to above ten percent, and with a tendency to an overall decline
over time both for fathers and children. However, estimating returns to higher education, the returns to college vs high school, and returns to a master degree vs high school, the returns are stable over this time period.
Again there are big differences across regions indicating an important role for the labor market in human capital investment. Especially the Western region has low returns to the post graduate level.
The plan for a next step, is to use a coherent panel data framework for analysing the relationship between income mobility across time and regions, and the what the main mechanisms are.