Intergenerational Persistence of Economic Status in Japan: Evidence from Three Generations and New Results on Assets and Debts

Zhi-xiao Jia , Keio University
Kayoko Ishii, Keio University
Isamu Yamamoto, Keio University

This study provides new evidence on multigenerational income mobility in Japan using representative household panel data, Japan Household Panel Survey (JHPS) and JHPS Second-Generation Supplement (JHPS-G2). We impute the lifetime incomes of three generations based on education and occupation, addressing the issue of unobservable grandparents’ income by estimating income returns to occupation and education for grandparents using microdata from the Social Stratification and Social Mobility (SSM) survey. Our findings show that the income elasticity between the grandparental and parental generations is 0.35, and that between the grandparental and grandchild generations is 0.147, indicating the existence of multigenerational income persistence. However, the transmission of income from grandparents to grandchildren primarily occurs through the parental generation, consistent with an AR(1) process. Building on this analysis, we further examine intergenerational correlations in assets and debts. We find that, after controlling for the father’s debt, higher grandparental income is associated with lower levels of debt among grandchildren. This suggests that wealthy grandparents can alleviate the financial burden of their grandchildren. Taken together, these results enhance our understanding of economic mobility and demonstrate that while two-generation models capture the main transmission channel of economic status, the direct influence of grandparents cannot be completely ruled out.

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 Presented in Session 124. Intergenerational Mobility and Influences