Explaining Intergenerational Income Persistence: Non-cognitive Skills, Ability and Education

The recent literature on intergenerational mobility in the UK has been focused on measuring the level and change in the relationship between parental income and children’s earnings as adults among recent cohorts. This paper is the first to analyse in detail the factors that generate these links. The paper seeks to account for the level of income persistence in the 1970 BCS cohort and also to explore the decline in mobility in the UK between the 1958 NCDS cohort and the 1970 cohort. The mediating factors considered are childhood health, cognitive skills, non-cognitive traits, educational attainment and labour market attachment. We find that these variables together explain slightly more than half of the intergenerational link for men. Changes in the relationships between these variables, parental income and earnings are able to explain three quarters of the rise in intergenerational persistence across the cohorts. The increased persistence in the second cohort comes from an increased influence of parental income in determining educational attainment, especially higher education, and labour market attachment. It is also clear that the stronger relationship between parental income and education comes in part through the growing relationship between parental income and the non-cognitive characteristics that influence education outcomes.