Intergenerational Earnings Mobility in Mexico

Intergenerational mobility is a growing concern among academics and policymakers. However, due to the absence of information on earnings for successive generations, little evidence is available for developing countries. This paper adds to this scarce body of evidence by studying the intergenerational mobility of earnings in Mexico. I rely on the Two-Sample Two-Stage Least Squares approach to estimate the intergenerational elasticity of earnings and the rank-rank coefficient at the national, urban and regional levels, considering the attenuation and life-cycle biases suffered by the estimators, using the ESRU Survey on Social Mobility (2011). The key results show less mobility than previously suggested. On average, 70.9 of the relative difference in fathers' earnings is transmitted to their children. Moreover, a 10 percentile point increase in the father's earnings rank is associated with a 3.15 percentile point increase in the son's earnings rank. At the regional level, strong intergenerational persistence is found in the South; whilst the North presents the highest intergenerational earnings mobility.