Intergenerational Mobility in Latin America

Inequality is widely regarded as one of the main problems facing Latin American countries both historically and today. The chasm that separates the haves and the have-nots is considered not only a source of social turmoil and violence (political and otherwise), but also a drag on economic growth and even a source of macroeconomic instability. Not surprisingly, social commentators from different ideological perspectives have repeatedly argued that a more equal distribution of income and assets ought to be a major, if not the main, priority of public policy in the region.¹

To better understand the causes of high inequality in the region and to inform policy choices that might affect the problem, it would be useful to know whether inequality is mainly driven by the absence of opportunities for large segments of the population stemming from individual family backgrounds or by differences in individual characteristics that are separate from family backgrounds. Two different societies with the same level of inequality may have very different levels of social welfare depending on whether family characteristics play a substantial role in determining individuals' fates in life. If they do, then inequality is largely the reflection of the absence of opportunities for those with poor family backgrounds, society is likely to be viewed as less fair than if family background were not so important, and policies aimed at reducing inequality have ample justification.

As important as the previous issues are, very little is known about the extent to which family background affects socioeconomic outcomes in Latin America, and hence little is known about the extent of inequality of opportunity either in the region as a whole or in particular countries. Public opinion surveys show that most of the region's inhabitants believe that opportunities are very limited for large sectors of the population.² These opinions have not been confirmed by systematic quantitative analysis, however, because of the absence of data sets containing information on various generations of adults in the same family, without which it is very difficult to gauge the effect of family background on socioeconomic outcomes.

We follow two different strategies to circumvent the lack of longitudinal data sets that hampers previous attempts to study intergenerational mobility in Latin America. First, we rely on household surveys that include retrospective questions about parental socioeconomic characteristics. After a thorough search, we were able to gather information on parental characteristics for adults in Brazil, Colombia, Mexico, and Peru, which, to the best of our knowledge, are the only countries in the region that have collected this type of information. These four countries account for 65 percent of the population of the region. We examine the intergenerational transmissions of schooling and occupational status for these countries and draw some comparisons with the United States. Our results reveal that intergenerational mobility is much higher in the United States than in these Latin American countries and that there are sizable differences in mobility among them. These differences are systematically associated with mean schooling attainment both over time and across countries. However, changes in schooling attainment do not appear to be correlated with changes in mobility.

This type of analysis is inherently historical in that it focuses on the connection between family background and schooling achievements for past generations. Our second strategy uses a database constructed on the basis of 112 household surveys for nineteen Latin American and Caribbean countries and the United States to study these connections for more recent generations. We focus on teenagers coresiding with their parents, and we examine the effects of family background on their relative schooling success. We document the existence of large differences in current mobility within Latin America and between Latin America and the United States. We also show that mobility tends to be higher in countries where teens have more years of schooling and in countries that spend more money on education, which confirms our earlier results.

The paper is organized as follows. The next section presents a brief overview of the literature on cross-national comparisons of intergenerational mobility. The paper then examines the differences across...