Jo Blanden Comments on The Fading American Dream

Absolute mobility in Great Britain Jo Blanden School of Economics, University of Surrey

Wednesday, 14 June 2017

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The Katz-Krueger statistic for Great Britain The British Cohort Study of those born in 1970 is our population of interest.

– Observed as adults in 2004 at age 34.

‘Parents’ are observed in the 1972-1980 from the General Household Survey.

We identify those between 32 and 36 with children born from 1968-1972.

We compare gross income from employment and self-employment, deflated using cpi to 2013 prices.

– No consistent family income across the data – Means we can only properly consider men.

The headline is that 83% of sons in this cohort have incomes higher than the median in their fathers’ generation.

Strong mobility fits with what we know about wage growth over this period, but median wage growth has fallen post 2010.

Wednesday, 14 June 2017

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Wage growth in the UK and US

Source: Blanchflower and Machin 2014, CentrePiece Magazine Wednesday, 14 June 2017

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Regional comparisons – no great variation apart from London K&K stat North

83.4

Yorkshire and Humber

83.6

North West

78.4

East Midlands

77.3

West Midlands

82.4

East Anglia

82.8

Greater London

88.7

Rest of South East

81.5

South West

83.5

Wales

82.5

Scotland

79.9

Wednesday, 14 June 2017

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Checks

Median earned income for ‘fathers’ in 2013 £15,880, median earned income for sons is £25,167.

Can be sense-checked against sample from administrative records, disadvantage is that this does not record self-employment data or presence of children. Only available from 1975.

88% KK when comparing within this sample (but only defined for the employed).

82.5% when comparing BCS sons with administrative data on fathers (again only defined for the employed)

Wednesday, 14 June 2017

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