The Effect of Family Structure on Intergenerational Earnings Mobility

Angela R. Fertig, Princeton University

Intergenerational earnings mobility, or the difference in earnings between parents and adult children, is commonly believed to represent equality of opportunity in a society. One factor that is not often thought of as a determinant of mobility is family structure. Using the PSID, this paper examines the effect of family structure - represented by single and step family experience - on mobility. Because there is selection into single and step families, I use family fixed effects in addition to OLS. I find that with each additional year in either a single or step family, biological father-child mobility rises and mother-child mobility falls. However, the fixed effects results indicate no difference in mobility between siblings with different durations in single or step families. This implies that the effect of family structure on mobility is not causal; rather, there are unobservable family characteristics that cause both the divorce and the mobility level.