Intragenerational mobility: Is it all about the family we’re from?

Intragenerational mobility is all about whether or not we can move into a different economic situation from the family we're born into.

Intragenerational mobility is partly about what our families can provide for us, whether or not they can support our education or help us in our careers via their own networks. It’s also about what wealth and assets they might leave to us, and to what extent that wealth boosts our chances in the long-run.

Despite the stereotype of the US as the Land of Opportunity, the US actually has some of the lowest intra-generational mobility in the world, and by some accounts the US comes second only to the United Kingdom, reported as having the very lowest.¹ The highest intra-generational mobility is in Denmark, Norway, Finland and Canada, all of which have strong public sectors. Although it’s difficult to get exact results and evidence for theories around this subject, there’s a strong link between societies where the state is strong enough to provide an equal starting ground for everyone, and higher mobility within generations.

One of the main ways intragenerational mobility is restricted is because of inheritance.³ It’s one of the most contentious issues in economic policy for people, because it’s such a personal one - who has the right to our money and assets when we pass away?

Some would say that taxing inheritance is one of the most invasive things a government could do. They say people are motivated by the fact that they want to provide for their families, and the idea that the state would simply take what’s left after we pass away and redistribute it is seen as incredibly unfair. Also, in a world where people can quite easily move abroad or put their savings in a bank abroad, a high inheritance tax might just incentivize people to leave the country, rather than contribute what they see as a reasonable amount to the state.

Others view things differently. They’d say that to encourage a meritocracy - where people’s positions in society are determined by their own effort - then the money we inherit should go straight back into the state to create the most fair environment. Considering the fact that the state has to fund itself somehow, taxing inheritance should be a better incentive to work hard than taxing income, which takes directly from what we have directly earned via our own efforts.