Intergenerational Income Mobility in Israel Oren Heller National Insurance Institute of Israel Hebrew University of Jerusalem 15.6.2017
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Intergenerational Mobility in Israel
Oren Heller – orenh@nioi.gov.il
Main Objectives & Contributions • One of the first papers to explore intergenerational mobility in Israel by the
use of administrative data • Measure earnings mobility in Israel • Include Israel to cross-country comparisons • Address variation across population groups and address patterns regarding
intergenerational mobility in Israel • Introducing factors affecting intergenerational mobility which haven’t been
explored yet, by exploiting traits unique to Israel
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Oren Heller – orenh@nioi.gov.il
Intergenerational Mobility in Israel
Cross-Country Comparison Great Gatsby Curve 0.8 0.7
0.67
0.6
0.6
0.5
0.46
IGE 0.4 0.3
0 20.0
0.46
0.41 0.34
0.26
0.18 0.17
0.5
0.58
0.47
0.4
0.32 0.27
0.2 0.1
0.5
0.29
0.52
0.49 0.44
0.32
0.19
0.15
25.0
30.0
35.0
40.0
45.0
50.0
55.0
60.0
65.0
Gini Apart from Israel, IGE estimates are from Corak (2016). Gini coefficients are the averages values of households’ disposable income Gini coefficients which are available between the years 1997-2001 as published by the World Bank.
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Intergenerational Mobility in Israel
IGE Results
Local-linear estimation; triangle kernel; bw: 1.5
Oren Heller – orenh@nioi.gov.il
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Intergenerational Mobility in Israel
Methods •
•
Log-log; IGE
•
Rank-Rank
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Intergenerational Mobility in Israel
Outline • Literature • Data • IGE: method, sample & basic results • Rank-rank: method, sample • Cross-sectional analysis: Ethnicity; Immigration • Summary & conclusions
Oren Heller – orenh@nioi.gov.il
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Intergenerational Mobility in Israel
Oren Heller – orenh@nioi.gov.il
Literature
Estimation & Comparison IGE • Children’s and parents’ log-earnings. For comparability: sons-fathers • Bjorklund and Jantti (1997), Couch and Dunn (1977), Solon (1999, 2002)
and Corak (2004, 2016) conduct cross-country IGE comparisons. • Following guidelines suggested by Grawe (2004)
Rank • Children’s and parents’ earnings ranked within distributions • Dahl and DeLeire (2008) and Chetty et al. (2014)
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Intergenerational Mobility in Israel
Oren Heller – orenh@nioi.gov.il
Literature Israel
• Aloni & Krill (2017) – MOF working paper based on
administrative data • IGE=0.166 -> 0.253 after adjustments • Results regarding gender, ethnicity and family’s origins are consistent
with ours. • 20% higher mobility among immigrants.
• Beenstock (2008) measures intergenerational correlation of
around 0.04 and Frish & Zussman (2009) intergenerational income elasticity of 0.15-0.26 among the Jewish population. Both use Census data (1983 + 1995)
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Intergenerational Mobility in Israel
Oren Heller – orenh@nioi.gov.il
Data • Population registry records (Ministry of Interior) allow to match
children and parents.
• And include demographic info: gender, birth date, religion, birth
country and registered address
• Earnings from Tax Authority: Salaries (1986-2015) and self-
employment income (1998-2014)
• Education: Matriculation exams (Bagrut) info (1998-2002;
Ministry of Education) & college attendance (1995-2015; NII)
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Intergenerational Mobility in Israel
Oren Heller – orenh@nioi.gov.il
IGE Sample Definition • 1975 birth cohort and their fathers ~ 44k pairs • Child earnings while 35 to 39 years old (2010-2014) • Father earnings while children are 11 to 20 years old (1986-1995;
fathers are 41-50 on average). • Old and young fathers are omitted: restricted to 23-42 years gap • Earnings are inflated and averaged over time • Earnings consist of • For children: paid salary plus self-employment income • For fathers: paid salary
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Intergenerational Mobility in Israel
Results - IGE Â IGE Observations R-squared
Total
Males
Females
0.276 (0.00505)
0.318 (0.00653)
0.251 (0.00715)
43,774 0.064
22,901 0.094
20,873 0.056
Robustness tests: Lifecycle; Attenuation; Self-employment exclusion
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Intergenerational Mobility in Israel
Rank-Rank Estimations
Oren Heller – orenh@nioi.gov.il
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Intergenerational Mobility in Israel
Rank Sample Definition • Main sample: • Child earnings at 35-36 years old • Parent earnings while children are 12-13 years old • 1974-1978 birth cohorts and their parents ~ 308k children • When utilizing Bagrut data: • 1980-1981 birth cohorts and their parents ~ 127k pairs • Child earnings while 32 to 33 years old • Parent earnings while children are 15 to 16 years old
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Intergenerational Mobility in Israel
Rank Results
Parents' Rank Constant
Observations R-squared
Average
Males
Females
0.251 (0.00173)
0.254 (0.00250)
0.251 (0.00225)
0.391 (0.00100)
0.454 (0.00144)
0.324 (0.00130)
308,429 0.064
156,364 0.062
152,065 0.076
Sample: 1974-1978 cohorts Robustness tests: Lifecycle; Attenuation
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Intergenerational Mobility in Israel
Rank Results Parents' Rank Controlling for children’s + education Constant
Observations
0.185
0.0942
(0.00277)
(0.00294) YES
0.451
0.449
(0.00168)
(0.00231)
120,507
112,228
0.036 0.079 R-squared Sample: 1980-1981 cohorts + matriculation achievements & higher education attendance length and type
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Intergenerational Mobility in Israel
Results - Rank
Local-linear estimation; triangle kernel; bw: 0.15
Sample: 1974-1978 cohorts
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Intergenerational Mobility in Israel
Cross-Sectional Analysis
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Intergenerational Mobility in Israel
Periphery & School Quality Non-UltraOrthodox Jews (“general population”)
Arabs
Ultra-Orthodox (Haredim)
0.288***
0.303***
0.199*
Periphery
(0.0451) -0.0139***
(0.0999) -0.0104
(0.106) -0.00962
Parents' Rank X Periphery
(0.00339) 0.0132***
(0.00658) -0.0140
(0.00804) 0.00115
School Quality (Score)
(0.00431) 0.0523***
(0.0119) 0.0266***
(0.0150) 0.00507
Parents' Rank X School Quality Proxy
(0.00538) -0.0216**
(0.00729) 0.0562**
(0.00480) 0.00647
Constant
(0.00885) 0.393***
(0.0220) 0.254***
(0.00799) 0.317***
(0.0262)
(0.0427)
(0.0544)
87,196 0.031
13,691 0.086
6,116 0.019
Parents' Rank
Observations R-squared
Sample: 1980-1981 cohorts
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Intergenerational Mobility in Israel
Ethnicity
(1)
(2)
(3)
***0.119
0.304-
0.377-
(0.00309)
(0.296)
(0.291)
***0.190-
***0.101-
***0.124-
(0.00604)
(0.00877)
(0.0104)
0.00108-
0.0228-
0.0120
(0.0122)
(0.0168)
(0.0197)
***0.159-
***0.128-
***0.104-
(0.00431)
(0.0117)
(0.0134)
***0.148
***0.130
***0.117
(0.0101)
(0.0267)
(0.0290)
YES
YES
Parents' Rank
Ultra-Orthodox (Haredim) Parents' Rank X Ultra-Orthodox
Arabs Parents' Rank X Arabs :Controlling for Localities & school quality proxies (including interactions with parents' rank) Education: matriculation achievements & higher education attendance
YES
Constant
***0.512
***0.880
***0.845
Sample: 1980-1981 cohorts
(0.00197)
(0.157)
(0.155)
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Oren Heller – orenh@nioi.gov.il
Intergenerational Mobility in Israel
Ethnicity
• • •
Each dot stands for parents’ earnings percentile of ethnic group Sample: 1974-1978 cohorts (males) Resemblance to Mazumder’s (2012) analysis of blacks’ vs. whites’ IGE
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Oren Heller – orenh@nioi.gov.il
Intergenerational Mobility in Israel
Cross-Country Comparison Great Gatsby Curve 0.80 0.70
0.67
0.60
0.60 0.50
0.50 0.46 IGE
0.34 0.30
0.15
0.18 0.17
0.47
0.49
0.52
0.44
0.40 0.28
0.32
0.29 0.26 0.22
0.27
0.20
0.32
0.19 0.11
0.10 0.00 20.00
0.46
0.41
0.40
0.50
25.00
30.00
35.00
40.00 Gini
45.00
50.00
55.00
60.00
Apart from Israel, IGE estimates are from Corak (2016). Gini coefficients are the averages values of households’ disposable income Gini coefficients which are available between the years 1997-2001 as published by the World Bank.
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Oren Heller – orenh@nioi.gov.il
Intergenerational Mobility in Israel
Immigration Total Immigrants Immigrant's Children Immigrant's Grandchildren Natives
Parents Rank 0.562 (0.279) 0.547 (0.278) 0.543 (0.273)
Absolute Mobility 0.517
90,806
0.590
0.538
2,782
(0.285) 0.597 (0.287)
0.538
Estimate
N
0.156 (0.00204) 0.179 (0.0119) 0.166 (0.00273)
235,987
0.133 (0.00325) 0.139 (0.0187)
7,344 135,833
Sample: non-Haredim Jews; 1974-1978 cohorts
0.502 0.505
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Oren Heller – orenh@nioi.gov.il
Intergenerational Mobility in Israel
Immigration Parents' Rank Immigrants or Immigrants' children Immigrants or Immigrants' children X Parents' Rank Continent of Origin Controls Sub-Districts & Periphery Level Controls Constant
Observations R-squared Standard errors in parentheses *** p<0.01, ** p<0.05, * p<0.1 Sample: non-Haredim Jews; 1974-1978 cohorts
(1)
(2)
(3)
0.133*** (0.00318) -0.0414*** (0.00265) 0.0332*** (0.00416)
0.131*** (0.00364) -0.0313*** (0.00278) 0.0248*** (0.00437) YES
0.504*** (0.00209)
0.507*** (0.00238)
0.140*** (0.0130) -0.0255*** (0.00303) 0.0192*** (0.00469) YES YES 0.479*** (0.00829)
235,987 0.026
235,987 0.028
213,783 0.033
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Oren Heller – orenh@nioi.gov.il
Intergenerational Mobility in Israel
Family Origins Parents' Rank
Africa
Africa X Parents' Rank
West Asia
West Asia X Parents' Rank
West Europe
West Europe X Parents' Rank
East Europe
East Europe X Parents' Rank
North America
0.136***
0.131***
***0.0749
(0.00454)
(0.0201)
(0.00454)
-0.0391***
-0.0307***
***0.0253-
(0.00682)
(0.00693)
(0.00666)
0.0217*
0.0160
***0.0289
(0.0112)
(0.0114)
(0.0110)
-0.0237***
-0.0266***
*0.0119-
(0.00713)
(0.00715)
(0.00696)
0.00912
0.0144
0.0129
(0.0118)
(0.0119)
(0.0115)
0.0343***
0.0337***
0.00912
(0.0129)
(0.0129)
(0.0126)
-0.0399**
-0.0400**
0.0190-
(0.0181)
(0.0181)
(0.0176)
0.0341***
0.0323***
0.00861
(0.00809)
(0.00811)
(0.00790)
-0.0282**
-0.0275**
0.00845-
(0.0112)
(0.0112)
(0.0109)
0.0368
0.0380
0.00320-
(0.0309)
(0.0309)
(0.0301)
Sample: 1974-1978 cohorts; Only natives: Excluding immigrants and their children; General 0.0499 Jewish-Population
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Intergenerational Mobility in Israel
Cross-Country Comparison Great Gatsby Curve 0.80 0.70
0.67
0.60
0.60 0.50
0.50 0.46 IGE
0.41
0.40 0.34 0.30
0.32 0.27
0.20 0.15
0.50
0.46
0.47
0.49
0.52
0.44
0.40
0.29 0.26 0.22 0.19 0.190.23
0.32
0.18 0.17
0.10 0.00 20.00
25.00
30.00
35.00
40.00 Gini
45.00
50.00
55.00
60.00
Apart from Israel, IGE estimates are from Corak (2016). Gini coefficients are the averages values of householdsâ&#x20AC;&#x2122; disposable income Gini coefficients which are available between the years 1997-2001 as published by the World Bank.
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Intergenerational Mobility in Israel
Oren Heller – orenh@nioi.gov.il
Summary & Conclusions • Estimated intergenerational mobility (IGE=0.276) seems to be too high. • Ethnic segmentation reduces mobility • High proportion of immigrants reduces mobility
=> Excluding these effects, mobility is even higher • Mandatory military service ?
• Arabs are less mobile mainly due to less equal opportunities in labor market • Lower earnings and mobility in periphery • Needed policy measures regarding transportation
• Two generations after immigration, family origin are correlated with the
given opportunities
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Oren Heller â&#x20AC;&#x201C; orenh@nioi.gov.il
Intergenerational Mobility in Israel
Thank You