Rags to Riches: Occupation and Utility Transmission in the United States

Abstract

This paper uses nationally representative survey data on income, occupation, and happiness from the Panel Study of Income Dynamics and the General Social Survey to show that occupation has significant effects on intergenerational mobility, which is a commonly used metric for inequality of opportunity. First, I develop a prediction model for utility from income and occupation. I then apply this prediction model to linked father-son pairs in order to estimate the extent to which a father’s utility predicts their son’s utility. The estimated utility transmission is significantly larger than many common measurements of income transmission. I show that the downward bias on most income-only measurements remains when controlling for heterogeneity in preferences. Although I do not draw any conclusions on causality, the methodologies used here are meant to guide further examination of intergenerational mobility.