- Data is sourced from federal income tax records from 1996 to 2002, including income tax records (1040 forms) and third-party information returns (such as W-2 forms).
- participants include individuals who (i) have a valid Social Security number or individual taxpayer identification number, (ii) were born between 1980 and 1991, and (iii) are U.S. citizens as of 2013.
- parents are defined as the first tax filers who claim the child as a child dependent and were between the ages of 15 and 40 when the child was born. 
- there are approximately 10 million chidren in the core sample 
- all monetary variabls are adjusted to 2012 dollars 
- the baseline income measure includes labor earnings and capital income as well as unemployment insurance, Social Security, and disability insurance. 
- demographic characteristics of the core sample line up closely with corresponding estimates in the Current Population Survey and the American Population Survey.

Chetty et al (2014) Data

Chetty, R., Hendren, N., Kline, P., & Saez, E. (2014). Where is the land of opportunity? The geography of intergenerational mobility in the United States. The Quarterly Journal of Economics, 129(4), 1553-1623. https://doi.org/10.1093/qje/qju022

University of Texas at Austin

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Relative mobility is the difference in mobility between children from high earning households and children from low earning households. Relative mobility asks, "what are the outcomes of children from low-income families relative to those of children from high income families?" 

Relative Mobility

An alternative method for calculating relative mobility, inspired by Dahl and DeLeire (2008) and first used by Chetty et al. (2014). Let $$R_i$$ denote child $$i$$'s percentile rank in the income distribution of children, and $$P_i$$ denote parent $$i$$'s percentile rank in the income distribution of parents. Regressing the child's rank $$R_i$$ on the parent's rank $$P_i$$ yields a regression coefficient $$\rho_{PR} = Corr(P_i, R_i)$$, called the rank-rank slope. The rank-rank slope $$\rho_{PR}$$ measures the association between a child's position in the income distribution and their parents' position in the distribution. Compared against the intergenerational elasticity of income, the rank-rank slope method has been noted for being more statistically robust.

Relative Mobility Method: Rank-Rank Slope

Where is the land of opportunity? The geography of intergenerational mobility in the United States.

In the United States, relative mobility is: 
- correlated robustly with teenage birthrates and college attendence rates. 
- roughly half that of both Canada and Denmark.
- generally associated with better outcomes for children from poor families
- within the country, highest in the Great Plains region and lowest in the Southeast US.

Relative Mobility in the US

The canonical method for calculating relative mobility pioneered by Solon 1999. In this method, a measure of relative mobility is calculated by regressing the log of child income on the log of parent income; it is a measure of relative mobility when comparing the difference in outcomes for children from high and low income parents.
In the equation: 
- PXY = Corr(logXi, logYi) is the correlation between log childincome and parent income and
- SD() denotes the standard deviation.


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