An empirical study of intergenerational transmission of poverty from the perspective of income mobility

“A person born into a deprived family is unable to obtain a proper education due to poverty, and consequently cannot find a good job and so earns a low income. This is how poverty is transmitted.” In contemporary Japan, where growing disparities in society are generating significant interest in the mass media, this is exactly the kind of statement that the media tends to seize upon. However, a variety of difficulties hinder any empirical analysis of such an intergenerational transmission of poverty. Firstly, as we shall see later, it is almost impossible to measure the income of the individual’s family of origin. And secondly, an excessive focus on the intergenerational transmission of poverty means that intergenerational transmission in other classes may end up being overlooked. Unless an accurate picture of intergenerational mobility in all income classes in Japan can be obtained, the transmission of poverty cannot be properly understood. With these difficulties in mind, therefore, our approach in this paper is as follows. Firstly, we present a method of estimating father’s income to serve as the income of the individual’s family of origin, and then proceed to estimate income by this method using actual data. Secondly, intergenerational mobility between estimated father’s income class and individual’s income class is analyzed to determine whether or not intergenerational transmission of poverty occurs. Finally, the mechanism that gives rise to intergenerational income (im)