Economica (2001) 68, 519±537

Three Meanings of Intergenerational Mobility

By DIRK VAN DE GAER,{ ERIK SCHOKKAERT{
and MICHEL MARTINEZ§
{ University of Ghent { Catholic University, Leuven
§ THEMA, University of Cergy-Pontoise
Final version received 7 September 2000.

We axiomatize three different motivations for being concerned about intergenerational

mobility: mobility as a description of movement, as an indication of equality of opportunity,
and as an indication of equality of life chances. These three motivations are shown to be
incompatible. None of the existing measures is acceptable as an indicator of equality of
opportunity or equality of life chances. We propose two new measures of intergenerational
mobility which more adequately reflect these concerns.

INTRODUCTION

Intergenerational mobility is an old concern in both sociology and economics.

This concern can have different motivations. One motivation treats inter-
generational mobility as a descriptive concept: it is a measure of movement
supposed to tell us something about the extent to which positions are changed
from one generation to the next. Other motivations are more directly normative
by nature; intergenerational mobility can then refer either to the degree of
inequality of life chances or to the size of inequality of opportunity. In practice,
the different motivations are often present at the same time. One then
calculates a convenient summary mobility index on the basis of a transition
matrix and interprets the results in the light of the different motivations. In this
paper we argue that this is too easy-going: the choice of measure is important,
and it is necessary to distinguish explicitly between the various motivations. In
the next section we will formalize them with some simple axioms and show that
these axioms are incompatible. This implies that it is impossible to devise a
measure that adequately captures simultaneously the basic intuitions of the
different motivations.
Three approaches to the measurement of intergenerational mobility can be
distinguished. The statistical approach constructs fairly ad hoc measures of
mobility (see e.g. Boudon 1973), or finds inspiration in the speed of
convergence of the Markov process defined by the intergenerational transition
matrix (see e.g. Sommers and Conlisk 1979). Shorrocks (1978) was the pioneer
of the axiomatic approach to the measurement of mobility; in a later
contribution (Shorrocks 1983) he looks further into the properties of several
popular indices of mobility. Cowell (1985) and Fields and Ok (1996, 1999)
axiomatize measures of mobility based on distance concepts. Finally, the
welfare-based approach was developed by Atkinson (1981), Markandya (1982,
1984), Chakravarty et al. (1985) and Dardanoni (1993). The crucial assumption
in the latter tradition is to attach a higher marginal utility of income to children
from poor parents. We will discuss that assumption in the next section.
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It turns out that, to the best of our knowledge, while some of the
measures proposed are useful to measure movement, no existing measure
gives a good indication about the degree of (in)equality of opportunity or
(in)equality of life chances. This is a rather disturbing finding, since the
normative concern about equality of opportunity will almost always
(implicitly or explicitly) be present when looking at intergenerational
transition matrices. We therefore propose a new measure of intergenera-
tional mobility, capturing inequality of opportunity, in Section II. However,
first we will have to argue that the transition matrix in itself does not contain
enough information for this purpose. Information about transition
probabilities has to be supplemented with information about income
differences in the children's income distribution. Section III goes somewhat
deeper into the measurement of equality of life chances. The final section
concludes.

I. THE ANALYSIS OF TRANSITION MATRICES

A large part of the literature on the measurement of intergenerational mobility

concentrates exclusively on the information in the so-called transition matrix.
In this section we will follow this tradition. Assume that the incomes of parents
and children have been divided into n equally sized quantiles. If no information
on the income levels of parents and children is to be used in the evaluation of
the intergenerational transmission process, the problem of measuring mobility
reduces to the evaluation of a bistochastic transition matrix.1 Formally, let
set of all bi-stochastic matrices P:
8 9
< X
n X
n =
ˆ P j pij æ 0 8 pij ; pij ˆ 1; pij ˆ 1 :
: iˆ1 jˆ1
;

In this expression pij is the probability that a child whose parent has an
income in quantile i ends up with an income in quantile j.2 Contrary to most
of the literature, we do not at this stage impose that income states of parents
or children are ordered. For each meaning of mobility, different assumptions
will be made about the presence of an ordering associated with income
states.
A mobility index is a function M : 2 < : P 2 M[P ]. We assume that a
mobility index induces a complete ordering of bi-stochastic matrices such that
higher values of the index reflect a larger degree of mobility. Incomplete
orderings, which fall outside the scope of the present paper, are studied in
Atkinson (1981), Conlisk (1990) and Dardanoni (1993).

(a) Three meanings of intergenerational mobility

To formalize desirable properties of a mobility index, we introduce some
additional concepts. Let us define  as the set of all permutations of N. A
typical element of  will be denoted by  ˆ {1 ; 2 ; ::: ; n }. Let rpi denote the
ith row of P and cpi the ith column of P. We define the following sets of
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2001] THREE MEANINGS OF INTERGENERATIONAL MOBILITY 521

transition matrices, containing respectively all column and row permutations

of P:
 C [P ] ˆ {P C 2 j 9 2  : P C ˆ [cp1 ; :::; cpi ; :::; cpn ]};

 R [P ] ˆ {P R 2 j 9 2  : P R ˆ [rp 01 ; :::; rp 0i ; ::: ; p 0n ] 0 };

where a prime denotes the transpose of the matrix.

The different motivations for being interested in intergenerational mobility
can be sharply distinguished when we focus on the conditions under which a
transformation of P is desirable. Formally, with N = {1, ..., n}, a transforma-
tion of P is defined as a mapping
T lkqr
" [P ] :  N 4  (0; 1] 2 : (P; l; k; q; r; e) 2 T lkqr
" [P ]  P *;

where,
8ij 6ˆ lq; lr; kq and kr; p*
ij ˆ pij ;

and
p *lq ˆ plq "; p *lr ˆ plr ‡ "; p k*q ˆ pkq ‡ "; p*
kr ˆ pkr "
with " > 0 and l 6ˆ k and q 6ˆr.
When the income classes of children and parents are ordered increasingly,
these transformations are Atkinson's diagonalizing switches (see Atkinson
1981, p. 18). Hence Atkinson's suggestion that diagonalizing switches increase
mobility is equivalent to the requirement that, 8P 2 : M[T lkqr
" [P ]] > M[P ]. We
claim that not all these transformations should be positively evaluated. The
meanings of intergenerational mobility that we discuss in this paper can be seen
as different opinions about the conditions under which these transformations
are desirable.
The first reason for having an interest in mobility is that one wants to
measure the degree to which children's positions differ from the position of
their parents. Mobility is defined as movement, and mobility matrices that have
more movement in them are preferred to those that have less movement Ðor,
formulated in a less normative way, are higher in the mobility ranking.
Provided that the income classes of parents and children are ordered in the
same way, say from low to high, all transformations that push probability mass
away from the diagonal of P will move more children out of their parents'
class. If movement is desirable, such transformations of P are desirable. We
formalize this requirement as follows.3

Axiom 1: MOV (Movement). 8 P 2 : M[T lklk

" [P ]] > M[P ].

The second reason why people find that intergenerational mobility is of interest
is because mobility matrices provide information about the extent of inequality
of opportunity. A transformation of P will be desirable if it equalizes
opportunities for children of different descent, i.e. makes the valuations of
their income prospects less unequal. While for a complete analysis we would
need a valuation function for these opportunities, for the moment a dominance
requirement can suffice: we say that children whose parents were in income
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class l have worse opportunities than children whose parents were in income
class k if the lottery facing the former is first-order stochastically dominated by
the lottery facing the latter. This leads to the second axiom.

Axiom 2: EOP (Equality of opportunity). 8 P 2 :

M[T lkqr
" [P ]] > M[P ] V

(i) q < r and children's income classes are ordered increasingly;

X
m X
m
(ii) p*lj æ p*kj 8 m 2 N:
jˆ1 jˆ1

The first condition ensures that the probability to obtain a low income
decreases (increases) for children whose parents had the level of income
associated with the l(k)th row of the transition matrix, while their
probability to obtain a higher income increases (decreases). The second
condition ensures that, after the transformation, children whose parents had
a level of income associated with the l(k)th row of the transition matrix still
have opportunities that are no better (no worse) than the opportunities
offered to children from the k(l)th row. No ordering of parental income
classes is needed for EOP to be applicable. EOP describes an (equalizing)
Pigou ± Dalton transformation in the space of opportunities. The transfor-
mation of P described by EOP is similar to, but distinct from, Dardanoni's
dynamic Pigou ± Dalton (DPD) transformation. Dardanoni (1993, p. 382)
defines the transformation on the set of monotonous matrices only.4 Since
EOP has to hold over a larger domain, requiring that EOP holds is more
demanding than requiring DPD.
The third reason why people care about intergenerational mobility is
because mobility matrices provide some indication of the extent of inequality of
life chances. Contrary to equality of opportunities, the only thing that matters
here is that children get equal lotteries. The prizes do not matter. Although
perhaps somewhat strange at first sight, this may be sensible when there is no
obvious ordering of the prizes. This is possible, for example, when one looks at
mobility matrices that describe the transition between socioeconomic
categories. Usually these categories are ordered in increasing socioeconomic
status. However, such an ordering can be questioned. The idea that prizes do
not matter is reflected by Axiom 3.

Axiom 3: FP (Focus on probabilities).

8P2 : 8 P C 2  C [P ] : M[P C ] ˆ M[P ]:

The idea of equalization of the probabilities is captured by the fourth axiom.

Axiom 4: ELC (Equalization of life chances). 8 P 2 :

M[T lkqr
" [P ]] > M[P ] V p *
lq æ p *
kq and p l*r Æ p *kr :
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2001] THREE MEANINGS OF INTERGENERATIONAL MOBILITY 523

The type of transformation described in ELC is an equalizing transfer of

probabilities of children in rows l and k of P. The only thing that matters is the
equalization of probabilities, and neither the prizes (e.g. children's income
classes) nor the socioeconomic background variable (e.g. parental income
classes) have to be ordered.
From the definition of the desirable transformations in MOV, EOP and
ELC, it is immediately obvious that these axioms do indeed capture different
intuitions about measuring intergenerational mobility. At the same time, it
is also clear that they reflect only necessary conditions and have to be
supplemented with other considerations to arrive at a complete measure. A
crucial one (for both EOP and ELC) is the focus on the fate of the children
themselves. Both equality of opportunities and equality of life chances are
most reasonable from a normative point of view when one takes an
individualistic position and rules out dynastic considerations. The basic idea
is that all children are equally valuable, independent of the income class (or,
broader: the socioeconomic position) of their parents. We formalize this by
the fifth axiom.

Axiom 5: AN (Anonymity). 8 P 2 : 8 P R 2  R [P ] : M[P R ] ˆ M[P ].

AN states that, in the evaluation of the inequality of children's

opportunities or life chances, the income class to which their parents
belonged does not matter. A situation in which children from poor parents
face a good lottery and children from rich parents get a poor lottery is exactly
equivalent to the situation where they swap lotteries. This contrasts sharply
with the position taken by Atkinson (1981), Dardanoni (1993) and
Markandya (1982, 1984). In these approaches swapping bad lotteries from
children from poor parents with good lotteries from children from rich
parents is desirable because children's marginal utility of income increases as
parental income decreases. In fact, the marginal utility of income of children
with poor parents would be larger even if their own personal income
prospects are more highly valued. This direct importance of parental income
in the evaluation of children's prospects goes against the basic individualistic
principle of normative economics. AN implies that what matters are the
income prospects of the children themselves. If a child from rich parents has
worse income prospects than a child from poor parents, inequality of
opportunity is the same as in the opposite case.

(b) Properties of mobility indices

To better understand the implications of the motivations described in the
previous section, it is useful to confront them with some properties of mobility
indices described in the literature. Shorrocks (1978) proposed the following
desirable properties of mobility indices.

Axiom 6: I (Immobility). 8 P 2 : M[P ] æ M[I].

Axiom 7: PM (Perfect mobility). Let P M ˆ (1=n)ii 0 where i is an n-

dimensional vector of ones. Then 8 P 6ˆ P M 2 : M[P M ] > M[P ].
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Axiom I says that the identity matrix, I, is the most immobile matrix
possible; if I holds, M [I] can be considered to be a lower bound for mobility. If
PM holds, then M[P M ] can be considered to be an upper bound for mobility.
Related to I is the eighth axiom.5

Axiom 8: PP (Perfect predictability). 8 R R 2  R [I] : M[I R ] ˆ M[I].

Perfect predictability says that all matrices that can be obtained by

permuting the rows of the identity matrix are equally bad. It is obviously
implied by the anonymity axiom AN.
There are not many problems with I. From the definitions given above it is
easy to see that, if M[I] is meaningfully defined,6 I is not violated by mobility
indices satisfying MOV, ELC or EOP: there does not exist any P 2 which,
after a transformation T lkqr" [P], results in I and satisfies the conditions
mentioned in the definitions of MOV, ELC or EOP. In all cases therefore it is
reasonable to treat M[I] as a lower bound. To analyse the relations between the
other axioms, we use the following matrices:
"1 1#
2 2
PM ˆ
1 1
2 2
" #
0 1
Bˆ
1 0
2 3
0:6 0:3 0:1
6 7
A1 ˆ 6
4 0:2 0:3 0:5 7
5
0:2 0:4 0:4
2 3
0:6 0:1 0:3
6 7
A2 ˆ 6
4 0:2 0:5 0:3 7
5
0:2 0:4 0:4
The following results can then be derived easily.

Theorem 1. Shorrocks' impossibility theorem. MOV and PM are incompatible.

Proof. Since B ˆ T 1212 M M

1=2 [P ], MOV implies M[B] > M[P ]. This contradicts
PM. &

Theorem 2. MOV and AN are incompatible.

Proof. Since B ˆ T 1212

1 [I], MOV implies M[B] > M[I]. According to AN,
however, M[B] ˆ M[I]. &

Corollary 1. MOV and PP are incompatible.

Proof. Follows immediately from the previous theorem, since AN implies

PP. &
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2001] THREE MEANINGS OF INTERGENERATIONAL MOBILITY 525

Theorem 3. MOV and FP are incompatible.

Proof. FP implies M[I] ˆ M[B]. However, by the same reasoning as in

Theorem 2, MOV implies M[B] > M[I]. &

Theorem 4. EOP and FP are incompatible.

Proof. EOP implies M[A2 ] > M[A1 ], since A2 ˆ T 1223

0:2 [A1 ], the second row
of A2 first order stochastically dominates the first and 2 < 3. At the same time,
we have that a permutation of the second and third column of A1 yields A2 .
Hence, by FP, M[A2 ] ˆ M[A1 ]. &

Consequently, measures that satisfy PM cannot be used to compare the

amount of movement present in two transition matrices. At the same time,
however, there does not exist any transformation of P M that satisfies the
conditions for ELC or EOP, and hence PM is compatible with both these
principles. The transition matrix P M indeed corresponds to complete equality
of life chances and complete equality of opportunity. In general, the theorems
indicate that the three described motivations impose quite different require-
ments on mobility indices. Therefore, it is not possible to formulate an index
that captures all the intuitions at the same time. Table 1 provides a summary of
the incompatibilities established in this section. A `y' means that the axioms are
compatible and an `n' means that they are not. PP is enclosed in parentheses
because AN implies PP.

(c) Missing measures

The next step now is obvious. Let us look at existing mobility indices and
analyse their properties. Table 2 summarizes some results.7 The first, second,
fifth, seventh and eighth measures may be attractive if one wants to measure
the amount of movement in the distribution of incomes from one generation to
the next. At least, they satisfy the necessary requirement MOV. The other three
measures do not satisfy MOV, ELC or EOP. Those who want a mobility index
that tells them something about inequality of chances or inequality of
opportunity have a hard time finding a measure that accords with their
intuitions.
It is perhaps interesting to note that the literature has often concentrated
on the case of so-called monotone matrices (see e.g. Conlisk 1989, 1990;

TABLE 1
INCOMPATIBILITY RESULTS

MOV ELC EOP

I y y y
PM n y y
AN n y y
(PP) (n) (y) (y)
FP n y n

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TABLE 2
MOBILITY INDICES AND THEIR PROPERTIES

MOV ELC EOP I AN FP PM

Ml [P] y n n ± n n n
MB [P] y n n ± n n n
Mf [P] n n n ± y y y
M [P] n n n y n n y
Mt [P] y n n y n n n
Md [P] n n n y y y n
MFO [P] y n n y n n n
MC [P] y n n y n n n

Dardanoni 1993, 1995), i.e. matrices in which each row is stochastically

dominated by the row below. It is easy to see that AN loses its meaning on this
restricted domain. Moreover, for monotone transition matrices EOP implies
MOV and EOP becomes equivalent to Dardanoni's dynamic Pigou ± Dalton
(DPD) transfers. Therefore, the most basic conflict described in this section is
no longer relevant.8 Since it has been argued that most empirical transition
matrices are close to monotonicity, this may partly explain the attention given
to MOV in the literature. However, we do not feel that domain restrictions are
an adequate answer to a conflict between different attractive axioms.9 Even if it
were true that non-monotone matrices are rare (which can be doubted10),
typically our sharpest intuitions involve the comparison of extreme cases
because these show most clearly the implications of the choice of a specific
mobility measure.
It remains worrying therefore that none of the existing measures satisfies
EOP or ELC. This raises the question of whether it is possible to develop
measures of mobility that capture the latter intuitions. It is to this issue that we
turn next.

II. MEASURING EQUALITY OF OPPORTUNITY AND THE IMPORTANCE OF THE

MARGINAL DISTRIBUTIONS
As noted before, EOP and AN are only necessary conditions which a measure
of intergenerational mobility should satisfy to capture a notion of `equality of
opportunity'. It is therefore a significant finding that not one of the popular
measures of mobility satisfies EOP (and only a few satisfy AN). However, if we
want to devise an alternative measure, we soon realize that the information on
transition probabilities is not sufficient to give adequate content to the notion
of equal opportunities (Section II(a)). The new measure we propose in
Section II(b) will therefore incorporate richer information.

(a) Intergenerational mobility and the importance of the marginal distributions

Until now we have defined a mobility index as a function of the transition
matrix only. This means that we assumed that the row rpi basically contains
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2001] THREE MEANINGS OF INTERGENERATIONAL MOBILITY 527

all the relevant information about the prospects of a child with parents in
position i. More specifically, the marginal distribution of children's incomes
(or, more generally, their socioeconomic positions) is treated as irrelevant. A
more general approach to intergenerational mobility would use the
information on this marginal distribution, i.e. on the prizes in the children's
lotteries. Denoting the domain of distribution functions by = and a typical
member of = by h, such a more general definition of a mobility index could
be M * : ( ; =) 2 < : (P; h) 2 M *[P; h]. The assumption implied in the
previous section can then be formalized as Axiom 9.

Axiom 9: IND (Independence of marginal distribution)

M *(P; h1 ) ˆ M *(P; h2 ) 8 h1 ; h2 2 =:

The first six mobility indices in Table 2 satisfy IND. Is this a sensible
assumption? It certainly is when we accept FP and reason within a
framework of equalization of chances, because in that approach the
information about the prizes is irrelevant by definition. IND may also be
sensible in an approach to mobility as movement. If there is a natural
ordering of the prizes, but we want to concentrate only on the rank order of
the children, the concrete form of h does not matter. Movement then is to be
interpreted as `jumps in the rank order'. However, an alternative
interpretation of `movement' could be in terms of `distances' between the
income positions of the children and those of their parents. This intuition is
present in the seventh and eighth mobility measure in Table 2. Compare two
situations with the same P. In the first situation there is only very little
inequality in the marginal distributions, which moreover are similar. In the
second situation, on the contrary, there are huge inequalities. One could
argue that in the latter situation the same transition matrix P implies much
more movement. This second interpretation is ruled out by IND, and hence
by the first six indices taken up in Table 2. Therefore, while IND is
defensible when measuring movement, it is not an innocuous assumption.
Finally, IND is clearly unacceptable when we want to measure equality of
opportunity. In a situation where the marginal distribution of the children's
incomes (or their socioeconomic positions) is almost equal, it is reasonable
to say that there is hardly any inequality of opportunity, irrespective of what
way the transition matrices look like.
In the following section, in which we propose a measure of equality of
opportunity, we will therefore use information about the possible income levels
of the children. Since we look at transitions between quantiles of parents' and
children's distributions, the information on h reduces to the vector (y1 ; :::; yn )
giving the incomes of the children in the different quantiles.

(b) A simple proposal to measure equality of opportunity

Our proposal to measure equality of opportunity consists of two parts. First,
we have to evaluate the opportunities of the children. Denoting the evaluation
of opportunities of children with a parent in class i by OPi , the simplest
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528 ECONOMICA [NOVEMBER

possible formulation is
X
n
(1) OPi ˆ pij i (yj ) with h 0i > 0
jˆ1

or, imposing AN,

X
n
(2) OPi ˆ pij  (yi ) with h 0 > 0:
jˆ1

This function can be interpreted and justified in different ways. It can

reflect a kind of ex ante `expected evaluation' of the income prospects of the
children at the time of their birth. Another interpretation Ð which we
prefer Ð has its roots in the recent approach to equality of opportunity,
where a distinction is made between factors for which individuals are to be
held responsible and factors for which they have to be compensated (see e.g.
Roemer 1996, and Fleurbaey 1998 for an overview). In our context it is
natural to assume that children are not responsible for the income position
of their parents, but have some control over their own income by behaving
more or less responsibly, indicated, for example, by their work effort. If their
income is a strictly increasing function of responsibility, and responsibility is
distributed independently from parental income, then the value of the
cumulative distribution function of children's income conditional upon
parental income identifies the degree of responsibility exercised by the
child.11 The rows of P, rpi , allow us to approximate these conditional
cumulative distribution functions for the children whose parents had a level
of income in class i. This way rpi allows us to identify the relative degree
of responsibility exercised by a child. Consider a child with a level of
income in the qth income class, while its parents' income is situated in class i.
In that case, the degree of responsibility shown by the child can be
approximated by

X
q
pij :
jˆ1

The opportunity set from which children can `choose' by behaving more or
less responsibly can then be represented as in Figure 1, where we have drawn
the case of three income categories and where we put cumulative frequencies
on the x-axis. This opportunity set will become more valuable if the
probabilities of obtaining higher incomes increase. This is obviously a more
attractive situation for the children. Our expression (2) measures the area
under this opportunity set.12
Second, we formulate a general social evaluation function

X
n
(3) Sˆ (OPi );
iˆ1

where (
) is a concave function, reflecting the inequality aversion as implied

by EOP.13
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2001] THREE MEANINGS OF INTERGENERATIONAL MOBILITY 529

FIGURE 1. Example of an Opportunity Set.

Following the standard approach in the measurement of income inequality

(Atkinson 1970), we can choose an isoelastic specification for both (
) in (3)
and  (
) in (2), resulting in (4) and (5), respectively:
X
n OP 1
i 1
(4) SOP ˆ ; æ 0;
iˆ1 1

where
X
n y 1j 1
(5) OPi ˆ pij ; æ 0:
iˆ1 1

We write `average opportunity' as

0 1
1 X n
IO ˆ @ A OPi ;
n iˆ1

and define the `equally distributed equivalent' level of opportunities OP E

implicitly by (using (4))
X
n OP 1 1 n (OP E ) 1
X 1
i
(6) ˆ :
iˆ1 1 iˆ1 1

Bringing all these elements together, we propose as an `index of inequality of

opportunities'

OP E
(7) I OPP ˆ 1 :
IO

From the way I OPP is constructed, it clearly satisfies EOP if > 0 and > 0,
AN and PM. It does not satisfy FP nor MOV.
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530 ECONOMICA [NOVEMBER

If we go for a complete ranking of different situations (P, h), we can use

(8) OP E ˆ IO(1 I OPP );
where we see the usual decomposition in a `level' component (average
opportunities) and an `inequality component'.

III. A NOTE ON MEASURING EQUALITY OF LIFE CHANCES

Since the prizes do not matter for the measurement of life chances, in this
approach information about the marginal distributions is obviously irrelevant
for the construction of an index of intergenerational mobility. Therefore IND
is acceptable, and we can proceed along the standard lines for the construction
of a normative inequality index, defined in this case over the probabilities only.
Assume that the ordering of transition matrices on the basis of inequality of life
chances can be represented by a function S ELC [P ]. We again require that this
function can be represented by an additive form:

Axiom 10: AD (Additivity).

n X
X n
S ELC [P ] ˆ gij [pij ] with g 0 > 0:
iˆ1 jˆ1

We can now establish the following theorem.

Theorem 5. A social ordering satisfies AD, AN, FP and ELC if and only if it is
represented by a social ordering function of the form.

n X
X n
S ELC [P ] ˆ g[pij ] with g 00 [
] < 0 and g 0 [
] > 0:
iˆ1 jˆ1

Proof. Imposing AN and FP on the structure in AD, the social ordering

can be represented by
n X
X n
S ELC [P ] ˆ g[pij ]:
iˆ1 jˆ1

The effect of a transformation of the transition matrix on the value of this

function is given by
S ELC [T lkqr
" [P ]] S ELC [P ] ˆ g[plq "] g[plq ] ‡ g[plr ‡ "] g[plr ]
‡ g[pkq ‡ "] g[pkq ] ‡ g[pkr "] g[pkr ]
ˆ g[pkq ‡ "] g[pkq ] ‡ g[plq "] g[plq ]
‡ g[plr ‡ "] g[plr ] ‡ g[pkr "] g[pkr ]:
Since ELC implies that pkq ‡ " Æ plq ", we have that the first line behind
the last equality sign will be positive if g 00 [
] < 0. Since plr ‡ " Æ pkr ", the
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2001] THREE MEANINGS OF INTERGENERATIONAL MOBILITY 531

second line will be positive if g 00 [
] < 0. Consequently, if g 00 [
] < 0, ELC
transformations are desirable for the social ordering in the theorem.
Necessity follows from the fact that, if g 00 [
] > 0, it is always possible to find
values for plq ; pkq ; plr ; pkr and " such that S ELC [T lkqr
" [P ]] S ELC [P ] Æ 0. &

Since we accept PM, it then seems straightforward to use as an immobility

index the percentage decrease in the social ordering function deriving from the
deviation of P from P M :

S ELC [P ]
I ELC [P ] ˆ 1 :
S ELC [P M ]

Again, as in the previous section, the existing literature on inequality

measurement suggests an isoelastic specification as an obvious choice for g[
]:

(pij ) 1 '
g[pij ] ˆ ;
1 '

where ' 2 [0; 1] can be interpreted as a parameter of inequality aversion. This

choice results in

1 X
n X
n
I ELC
' [P ] ˆ 1 (npij ) 1 '
:
n2 iˆ1 jˆ1

IV. CONCLUSION
Intergenerational transmission is a complex process that can be analysed
from widely divergent perspectives. One perspective is rather descriptive in
nature and relates to the amount of movement that is present in the
intergenerational process. From this perspective, the information that is
available in a transition matrix is sufficient, if we restrict our notion of
movement to jumps in the social rank order. There exist several mobility
indices that capture this concern about movement. However, researchers
often calculate such a mobility index, and then implicitly or explicitly
interpret their findings in the light of other more normative concerns related
to the degree of inequality of life chances or to the degree of inequality of
opportunity. We have argued that this latter step is not justified. We have
pinned down the necessary requirements that an index of inequality of
opportunity or inequality of life chances should satisfy. These requirements
amount to conditions under which Atkinson's diagonalizing switches are
desirable and a straightforward anonymity condition. We have shown that
none of the existing indices is satisfactory as a measure of inequality of
opportunity or inequality of life chances.
We have then proposed two new measures. Equality of life chances may be
relevant in a situation where there is no obvious ordering of the prizes. More
important for economics is the concept of equality of opportunity. This
concept has been given a more concrete content in recent social choice theory.
It is immediately obvious that the information contained in the transition
matrix is not sufficient if we want to measure equality of opportunity, and that
# The London School of Economics and Political Science 2001
532 ECONOMICA [NOVEMBER

one has to make use of information about the marginal income distribution of
the children. We propose a measure in the spirit of the social welfare function
approach to inequality measurement.

APPENDIX: THE AXIOMS AND SOME MEASURES OF MOBILITY

Spectral decomposition of the matrix P yields

X
n
Pˆ r Ar ;
rˆ1

where r is the rth eigenvalue of P and {Ar } is the corresponding spectral set. Ar As ˆ 0 if
r 6ˆ s, Ar Ar ˆ Ar and

X
n
Ar ˆ I:
rˆ1

The Tth period transition matrix, which, by definition, contains the probabilities that a
dynasty will be in state j after T periods, given that its founding father started in state i,
is given by

X
n
PT ˆ (r ) T Ar :
rˆ1

The largest eigenvalue of P is equal to 1 because of the stochastic nature of P, so that

X
n
P ˆ  0 ‡ r Ar
rˆ2

and

X
n
P T ˆ  0 ‡ (r ) T Ar ;
rˆ2

where  is the equilibrium probability vector:  ˆ P. When the Markov chain is assumed
to be regular,  is unique and all elements of  are strictly positive. If we analyse a mobility
measure that uses the equilibrium probabilities vector, we assume a regular Markov chain,
excluding matrices such as B and I from consideration. The first eigenvalue is equal to 1.
The other eigenvalues will be smaller than 1 in absolute value and therefore
limt 2 1 P t ˆ  0 : They will determine the speed at which the transition matrix converges
to the perfectly mobile matrix, which is the situation without generational dependence.
Finally, note that, for regular bi-stochastic matrices,  ˆ (l=n).

Mobility indices for regular Markov chains

In this section we discuss mobility measures whose formulation and interpretation
depend on the assumption that we start from an equilibrium distribution  ˆ (1=n).
1. The expected proportion of family lines changing class from one generation to
the next in steady state is given by

1 X
n X
n 1 X
n
Ml [P ] ˆ pij ˆ 1 pii :
n i ˆ 1 j ˆ 1; j 6ˆ i n iˆ1

We have that Ml [T lkqr

" [P ]] Ml [P ] ˆ (1=n)(lq ‡ kr kq lr )", where ij ˆ 1 if i ˆ j
and ij ˆ 0 otherwise. Consequently, this measure satisfies MOV and does not satisfy
# The London School of Economics and Political Science 2001
2001] THREE MEANINGS OF INTERGENERATIONAL MOBILITY 533

ELC or EOP. From the definition of Ml [P ], it can easily be seen that the measure does
not satisfy AN, PM or FP.
2. When we weight each class transition by the number of class boundaries that
have been crossed, we get Bartholomew's measure of mobility:

1 1 X
n X
n
MB [P ] ˆ pij j i j j:
(n 1) n iˆ1 jˆ1

We have that

1 1
MB [T lkqr
" [P ]] MB [P ] ˆ " ( jl qj‡jl rj‡jk qj jk r j ):
(n 1) n

If l ˆ q and k ˆ r, this expression is positive. Hence this mobility measure satisfies

MOV. On the other hand, it is always possible to construct a matrix such that ELC and
EOP are not satisfied. AN, PM and FP are not satisfied either.
3. It is also possible to define measures that directly depend upon the deviation of P
from  0 . One such measure is

1 X
n X
n 1
Mf [P ] ˆ 1 pij :
n jˆ1 iˆ1 n

We have

Mf [T lkqr
" [P ]] Mf [P ]
0 1
1 1 1 1 1
ˆ @ plq plq " ‡ plr plr ‡" A
n n n n n
0 1
1 1 1 1 1
‡ @ pkq pkq ‡ " ‡ pkr pkr " A:
n n n n n

Suppose plq (1=n) < "; plr (1=n) < 0; pkr (1=n) < " and pkq (1=n) < 0. In that case,
the expression above can be written as
0 0 1 1
1 1 1 1 1
Mf [T " [P ]] Mf [P ] ˆ @2@ plq
lkqr
‡ plr ‡ pkq ‡ plr A 4 j " jA
n n n n n

For each of the transformations considered, a suitable choice of P and " can make this
expression positive or negative. Hence this measure does not satisfy MOV, ELC or
EOP. From the definition of the mobility index, it clearly satisfies AN and FP. Mobility
is maximal if pij ˆ (1=n) 8ij so that PM is satisfied.

Measures based on eigenvalues of P14

1. A further measure of mobility is based on the second largest eigenvalue of the
transition matrix:
M [P ] ˆ 1 j 2 [P] j:
Take the matrices B and I. The determinant of I equals 1, the trace of the matrix is 2.
Hence the second eigenvalue is 1. The determinant of B equals 1 and its trace is 0.
Hence the second eigenvalue of B is 1. Both eigenvalues are equal in absolute value,
and therefore M [B] ˆ M [I]. However, since B ˆ T 1212
1 [I], MOV implies M[B] > M[I].
Therefore, MOV is not satisfied. We will check whether this mobility measure satisfies
ELC or EOP with a numerical example.
# The London School of Economics and Political Science 2001
534 ECONOMICA [NOVEMBER

Compare the matrices

2 3 2 3
0:6 0:3 0:1 0:6 0:3 0:1
6 7 6 7
B1 ˆ 6 7 6 7
4 0:2 0:4 0:4 5 and B2 ˆ 4 0:2 0:35 0:45 5;
0:2 0:3 0:5 0:2 0:35 0:45
where B2 ˆ T 2323
0:05 [B1 ]. This transformation satisfies the conditions for both ELC and
EOP. Therefore we should have that M[B2 ] > M[B1 ]. However, computation of the
eigenvalues results in M [B2 ] ˆ 0:6 ˆ M [B1 ].
The product of the eigenvalues of P is equal to the determinant of P. Interchanging
rows of P does not change the absolute value of the determinant and hence the absolute
value of the product of the eigenvalues. It does, however, change the trace of the matrix
which is equal to the sum of the eigenvalues. The eigenvalues change and M [P ] will not
satisfy AN. FP does not hold true for a similar reason. The trace of P M ˆ 1 and the
determinant of P M ˆ 1. Hence i ˆ 0 8i æ 2 and PM is always met. Since i ˆ 1 8i if and
only if P = I, I is always met. P
2. The arithmetic mean of the eigenvalues, (1=(n 1)) rnˆ 2 r ; can be used as the
basis for a measure of immobility. Since the sum of the eigenvalues of P is equal to the
trace of P, a reasonable measure is
Mt [P ] ˆ (n Tr[P ])=(n 1):
Pushing probability mass away from the diagonal decreases the trace of P, and therefore
Mt [P ] satisfies MOV. Consequently the measure violates AN, PM and FP. I is satisfied.
Since the mobility measure is sensitive only to the diagonal elements of P and ELC and
EOP allow non-diagonal transformations, ELC and EOP are not satisfied. Note that
Mt [P ] leads to the same ranking as Ml [P ].
These conclusions are valid for many sociological mobility indices (see Boudon 1973
for their definition). For the class of mobility indices considered in this paper, Mt [P ] is
equal to the generalized Yasuda mobility index and a variation of the Matras index. It is
also proportional to the generalized Boudon index. Hence all these measures have the
same properties. There also exist other measures which depend only on the diagonal
elements of P. This is the case for any judgment based on the n values of the Glass index
or their inverses, the n values of the Prais index. Also, these measures15 have the same
axiomatic properties as Mt [P ].
3. The absolute value of the geometric mean of the eigenvalues, j 2 3 ::: n j 1=(n 1) ,
is another possible immobility measure. Since the product of all the eigenvalues equals
the determinant of the matrix, we can define

Md [P ] ˆ 1 j P j 1=(n 1)
:
Changing rows in a matrix does not change the absolute value of its determinant.
Therefore, this measure satisfies AN always and cannot satisfy MOV. Changing
columns does not affect the absolute value of the determinant either, so FP is satisfied.
j P M j ˆ 0 so that P M corresponds to maximal mobility. However, as soon as any two
rows of the matrix P are equal, jP j ˆ 0 such that PM is not satisfied. If we start from a
matrix where two rows are equal, no further transformation will affect the value of the
determinant. Consequently, ELC and EOP are not satisfied either. The absolute value
of the product of the eigenvalues is maximal if all i are equal to 1. Hence I is met.

Measures based on distance

Measures that are based on distance are defined as a function of the vector of parental
incomes, x 2 < m , and the vector of childrens' incomes, y 2 < m . As such, there is no
direct relationship to the transition matrix P. We suggest the following procedure, which
allows us to establish such a link in a simplified case.
Suppose that there exist n income classes in this society, with the associated vector
of incomes z 2 < n . In each income class, there are exactly K parents and K children:
m ˆ nK. As a result, there is now a one-to-one correspondence between the value of the
# The London School of Economics and Political Science 2001
2001] THREE MEANINGS OF INTERGENERATIONAL MOBILITY 535

elements of the transition matrix P and the frequency with which particular
combinations of parent ±child incomes occur. Each combination (zi ; zj ) occurs exactly
pij K times. Note that the effect of a transformation T lkqr" [P ] becomes equivalent to a
change in the frequency with which certain combinations of parent± child incomes
occur: (zl ; zq ) and (zk ; zr ) will occur less frequently, and (zk ; zq ) and (zl ; zr ) more
frequently. Without further loss of generality, we can assume that the change in
frequency equals one.
We consider two measures of distance.
1. Fields and Ok (1996) axiomatized the following measure of mobility:

X
m
d[x; y] ˆ j xi yi j :
iˆ1

Under the assumptions made above, this reduces to

n X
X n
MFO [P ] ˆ j zi zj j pij K:
iˆi jˆ1

The effect of the change in frequency on MFO [P], and hence MFO [T lkqr
" [P ]] MFO [P ],
is equal to

j zl zq j ‡ j zk zq j ‡ j zl zr j j zk zr j
ˆ 2(min{zl zq ; 0} min{zk zq ; 0} min{zl zr ; 0} ‡ min{zk zr ; 0})

This effect is determined only in one interesting case. If zl ˆ zq , and zk ˆ zr , then the
expression becomes positive. Since we assume in this section that the level of income
corresponding to the ith class is the same for parents and children, this is the situation
where T lkqr
" [P] takes place on the diagonal of P. In that sense, MFO [P ] satisfies MOV.
EOP and ELC are not satisfied. M[I] = 0 such that I is satisfied. PM and A do not hold
true. Finally, note that the wider class of mobility indices suggested in Fields and Ok
(1999) has the same properties as MFO [P ].
2. Cowell (1980) proposed a family of measures of distributional change. We will
check the properties of one of his measures:
2 3
1 X m x
i xi
J[x; y] ˆ ln 4 5;
m i ˆ 1 Zx yi

where Zx denotes average parental income. In the simplified framework that we use, we
get
2 3
1 Xn X n z
i zi
MC [P ] ˆ ln 4 5 pij K:
[
m iˆ1 jˆ1 z zj

The effect of the change in frequency described above on MC [P ], and hence

MC [T lkqr
" [P ]] MC [P ], equals
0 2 3 2 3 2 3 2 31
1 zl zk zk z
@ zl ln4 5 zk ln4 5 ‡ zk ln4 5 ‡ zl ln4 l 5 A
m[z zq zr zq zr
0 2 3 2 31 2 3
1 zq zr 1 zr
ˆ @zl ln4 5 ‡ zk ln4 5 A ˆ (zk zl ) ln4 5
m[z zr zq m[z zq

As before, consider the case where zl ˆ zq and zk ˆ zr . In that case, it is obvious that
zr zq > (<) 0 u zk zl > (<) 0;
# The London School of Economics and Political Science 2001
536 ECONOMICA [NOVEMBER

such that the change in mobility measure is indeed positive. MC [P ] thus satisfies MOV;
it will not satisfy EOP nor ELC. MC [I] ˆ 0, and will be positive for any other P, such
that I is satisfied. PM and A are not met.

ACKNOWLEDGMENTS
We thank Geert Dhaene, Marc Fleurbaey, Tony Shorrocks, Alain Trannoy and two
anonymous referees for their valuable comments. This paper forms part of the research
programme of the TMR-Network, `Living Standards, Inequality and Taxation'
(Contract no. ERBFMRXCT 9802480) of the European Communities, whose financial
support is gratefully acknowledged.

NOTES
1. Most of the results in this paper hold true for the broader class of stochastic matrices
8 9
< Xn =
ˆ P j pij æ 0 8pij ; pij ˆ 1 :
: jˆ1
;

Notationally however, the problem becomes much more complex, since one has to account for
differences in the number of children corresponding to each cell of the matrix P. Consider, e.g.,
Atkinson's diagonalizing switches, defined further on for bistochastic matrices. For general
stochastic matrices they are defined in the same way, except that now
p l*q ˆ plq ("=pl ); p *lr ˆ plr ‡ ("=pl ); p *kq ˆ pkq ‡ ("=pk ) and p k*r ˆ pkr ("=pk ) where pl and pk
are the number of children whose parents were in the lth and kth income class, respectively.
Since the main ideas of this paper can be more easily explained for bistochastic matrices, we
decided to stick to the latter.
2. Some mobility indices are defined only for bistochastic matrices that correspond to a regular
Markov chain. A transition matrix P is regular if and only if, for some N, P N has no zero
entries. For these mobility indices, the domain should be adjusted to exclude non-regular
bistochastic matrices.
3. A similar requirement was introduced by Shorrocks (1978) as `monotonicity'.
4. To obtain the DPD condition, condition (ii) is replaced by monotonicity of the transformed
matrix:
X
m X
m
p s*j æ p s*‡ 1; j 8m 2 N; 8s 2 N={n}
jˆ1 jˆ1

and parental income classes have to be ordered increasingly.

5. We assume that M[I R ] is well defined.
6. Some mobility measures make sense only when we start from the equilibrium distribution. For
our bistochastic matrices, this means that all income classes contain the same number of
individuals. M[I] does not lead to this equilibrium, and in that sense M[I] might not be
meaningfulÐsee also the Appendix.
7. The definitions of the mobility indices, the proofs of the results and the restrictive
circumstances under which MFO [P ] and MC [P ] satisfy MOV are given in the Appendix.
8. It remains true, however, that the ordering resulting from EOP is finer than the ordering
resulting from MOV. All transformations leading to an increase in mobility according to MOV
also lead to an increase in mobility according to EOP. In addition some transformations not
involving the diagonal elements cannot be evaluated on the basis of MOV but can be evaluated
with EOP.
9. To resolve the conflict between MOV and PM, Shorrocks (1978) also suggested that one
`exclude those matrices which, by any stretch of the imagination, are unlikely to arise in
practice'. He therefore concentrates on matrices with a quasi-maximal diagonal and shows that
MOV and PM are no longer incompatible on this restricted domain. P has a quasi-maximal
diagonal when there exist positive 1 ; :::; n such that i pii æ j pij 8i; j.
10. To give some interesting examples, the transition matrices given by Atkinson et al. (1983) for
Great Britain, by Checchi et al. (1999) for Italy and by Behrman and Taubman (1985) for the
United States are not monotonous. In this last case the violations of monotonicity are
particularly severe. This is due mainly to the fact that it is a large (decile) matrix: of course,
distinguishing more groups will lead to more deviations from monotonicity. If each individual
# The London School of Economics and Political Science 2001
2001] THREE MEANINGS OF INTERGENERATIONAL MOBILITY 537

were put into a cell of his own, the transition matrix would be monotonous only if the
intergenerational process did not allow any reranking.
11. This idea is originally due to Roemer (1993).
12. See Bossert et al. (1999) for this interpretation of opportunity sets, and Fleurbaey (1998) for a
critical assessment of the hypothesis required for this procedure to work.
13. The differences in opportunity sets are due to non-responsibility characteristics. As a
consequence, the natural choice for (
) selects the smallest opportunity set.
14. These measures and several variants have been discussed in more detail in Sommers and
Conlisk (1979).
15. The exclusive dependence of many sociological measures upon the diagonal elements of the
matrix of transition is probably due to the difficulty of ordering sociological classes such as
occupations. We have suggested the ELC approach to analyse this situation. None of these
sociological measures satisfies ELC, however.

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