The future income level of the child is more strongly determined by the father’s income than previously thought, according to a study from Statistics Canada published Friday.
The study, which looks at intergenerational income mobility, found that approximately 32% of the earnings differences in a father’s generation is passed on to their sons. Previous data had put that number closer to 20%.
If parents and their children were all located in the exact same positions in the income distribution, the rate would be 100%, according to the study. If there was no relationship, the rate would be 0%.
Improved measures of lifetime earnings for both fathers and sons has revealed a new picture of intergenerational income mobility in Canada, StatsCan says in a statement. For daughters, the persistence of earnings from generation to generation is weaker at about 23%, which StatsCan says is comparable to estimates from earlier studies.
The national statistics agency also reports that the overall average rate conceals differences across the earnings distribution. For higher earning fathers, the rate is closer to 45% for sons. “This suggests that nearly half of the earnings advantage of high-earning fathers is passed on to their sons,” StatsCan says.
Among fathers with lower earnings, the rate is about 20% “This suggests there is a significant degree of upward intergenerational mobility among sons from the bottom of the earnings distribution,” StatsCan adds.
Although intergenerational income mobility in Canada looks to be weaker than previously thought, StatsCan says it is still higher than in many other advanced countries. For example, in the U.S. approximately 50% of a child’s future income is determined by their father’s position on the income distribution.
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