The Decline of Intergenerational Income Mobility in Denmark: Returns to Education, Demographic Change, and Labor Market Experience

Although there is some evidence of declining intergenerational mobility in wealthy countries, the sources of these changes are not well understood. This paper examines the changes in intergenerational mobility in Denmark, which has one of the highest levels of intergenerational mobility in the world. We show that mobility has been declining for both men and women since the late 1950s across the most recent cohorts who are now old enough to measure permanent adult income, and that these changes were concentrated among children born into the middle three-fifths of the income distribution. We examine the sources of this decline by testing hypotheses related to demographic processes, returns to education, and work experience. Our results highlight the importance of both parent and child work experience and family structure in the family of origin among both men and women as well as, to a lesser degree, marital status, assortative mating, and childbearing among women. Although education was an important driver of parent-child income rank associations (IRA) in each cohort, it played little role in accounting for increases in those associations across cohorts.