(Crossposted to Core Economics)
I typically find that there’s a great benefit in posting draft papers online, and getting feedback before the paper finally goes to the journal. But I’m also learning about possible disadvantages.
In 2006, I wrote what I think is the first Australian paper to have estimated the ‘intergenerational elasticity of earnings’ for fathers and sons. In other words, what impact does a 10% rise in fathers’ earnings have on sons’ earnings? (We use fathers and sons rather than mothers and daughters due to lower female participation rates in previous generations). I presented a preliminary version at a conference in Germany, and the conference organisers posted it online.
In the initial version, I had a very low estimate of the intergenerational elasticity (IGE), putting it in the range 0.14-0.19. If true, this would have made Australia one of the most socially mobile countries in the world (the higher the number, the less mobility across generations). Actually, the reason the number was low was the methodology, and at that stage, I still needed to figure out how much to adjust it upwards. The text included these qualifications, but didn’t give the reader a better answer than 0.14-0.19.
It wasn’t until my paper was published in December 2007 that I worked out the best methodology for adjusting the figure, and suggested that the true Australian IGE was probably in the range 0.2 to 0.3. In other words, a 10% increase in a father’s earnings translates into a 2-3% increase in his son’s earnings. In terms of international rankings, this suggests that Australia is more socially mobile than the US (IGE=0.4-0.6), less socially mobile than Scandinavia (IGE=about 0.2), and approximately as socially mobile as the UK. Given that’s where we fit in the inequality rankings, this feels about right to me. For anyone who’s interested in the topic, here’s the final version, which also estimates changes over time (bottom line: no evidence that Australian social mobility changed from the 1960s to the 2000s).
But by December 2007, the draft number (implying that Australia is one of the most socially mobile countries in the world) had a life of its own. In 2007, an OECD report picked up on it and included the centrepoint of the 0.14-0.19 range (0.165) in a survey article. Later that year, an Economic Roundup article repeated it. Both were inadvertent, and I emailed both authors afterwards. But that didn’t seem to help in the case of the OECD. In December 2008, a new OECD report (Growing Unequal, chapter eight) carried out extensive statistical analysis using the 0.165 number. I’m grateful for the citations, but can anyone help me get a message to Paris that if they want a point estimate, an Australian intergenerational elasticity of 0.25 would be closer to the truth?