Study: Introducing a new integrated dataset for research on intergenerational mobility
New estimates of intergenerational mobility confirm that the income of adult Canadians is related to the income their families had when they were children. Among Canadians born between 1963 and 1979 to parents with an income in the bottom income quintile, 31.9% remained in the bottom income quintile as adults (aged 30 to 34), while 10.0% reached the top income quintile.
Conversely, 35.5% of Canadians who had parents in the top income quintile were in the top quintile as adults, while 12.8% had moved to the bottom quintile.
As for Canadians born to middle-income parents, they had similar odds of ending up in the bottom quintile (19.7%), middle quintile (20.3%) or top quintile (16.9%) as adults. In other words, these people faced the highest level of intergenerational mobility: their economic outcomes were the least related to those of their parents.
Intergenerational mobility is lower for more recent birth cohorts
Parental income mattered more for the incomes of Canadians born from 1977 to 1983 than it did for those born from 1967 to 1976, indicating that intergenerational mobility was lower in the more recent cohort.
Intergenerational income mobility is often measured using a coefficient value that ranges from 0 to 1. If parents and their adult children were located in the exact same positions in their respective income distributions, a value of 1 would result. Conversely, if their locations in the income distributions were completely unrelated, a value of 0 would result.
The intergenerational income mobility coefficient between the family incomes of Canadians (aged 25 to 29) and their own parents was 0.19 for the 1967 to 1976 birth cohort and 0.24 for the 1977 to 1983 birth cohort. This means that incomes across generations were more closely related for the more recent birth cohort.
Despite the decrease in intergenerational mobility, Canada remains a mobile country by international standards. For instance, comparable estimates for the United States are at around 0.34.
Note to readers
Two studies are released today that report on intergenerational income mobility in Canada, and assess the contribution of a new data source, the Longitudinal and International Study of Adults (LISA) family files, to this type of analysis. The first study, entitled "Assessing the suitability of the Longitudinal and International Study of Adults for the estimation of intergenerational income mobility," shows that estimates of intergenerational mobility from the LISA data are broadly consistent with existing findings for Canada. The second study, entitled "Sample selection in tax data sets of intergenerational links: Evidence from the Longitudinal and International Study of Adults," documents the methodology that was used to create the data set, and its implications for the estimation of intergenerational mobility.
The results for both studies were obtained using the 2014 LISA family files, which integrate LISA data for the reference year 2014, with data from the T1 Family Files (T1FF) for the period from 1982 to 2013. In addition to providing reliable income data for LISA respondents and their parents, these studies include detailed longitudinal survey information on respondents such as education, skills, health, training, and job characteristics. Future research using these data will focus on some of the factors, such as educational attainment, that are related to movements up and down the income ladder.
Estimates use average parental total family income (sum of both parents for couples) when the child was aged 15 to 19 and average child total family income when the child was aged 30 to 34. Observations are included if the average income has a value of $500 or more. Both members of a couple need to be above the inclusion threshold for each of them to be included.
The research papers "Assessing the suitability of the Longitudinal and International Study of Adults for the estimation of intergenerational income mobility" and "Sample selection in tax data sets of intergenerational links: Evidence from the Longitudinal and International Study of Adults," which are part of the Longitudinal and International Study of Adults Research Paper Series (89-648-X), are now available.
For more information, contact us (toll-free 1-800-263-1136; 514-283-8300; STATCAN.infostats-infostats.STATCAN@canada.ca).
To enquire about the concepts, methods or data quality of this release, contact Xavier St-Denis (905-867-6438; firstname.lastname@example.org).