Intergenerational Mobility of Income, Wealth and Consumption in Taiwan

This paper is the first study using tax records on incomes, assets and pseudo consumption of children and their parents from 1998 to 2013 to present evidence on intergenerational mobility in Taiwan. First, we present the joint distribution of parent-child incomes and assets by means of 5 x 5 transition matrices. Second, we use the income, asset and pseudo consumption data to estimate measures of intergenerational mobility, which include the intergenerational elasticity and the intergenerational rank association between child and parent. On average, the intergenerational mobility in Taiwan is high in comparison to the estimations in the United States and some European countries. Our results reveal a stronger relationship between wealth of children and parents. The intergenerational wealth mobility tends to be lower than the income mobility for Taiwan and the wealth estimations in other countries as well. Moreover, while the overall intergenerational income mobility is high, we find that the mobility is much lower at the very top of both the income and asset distribution. Children growing up with the exception of the upper end of the parental distribution might have equal chance to move upwards or downwards; however, children born to the top income (asset) families are more likely to keep advantages in the upper end of the income and asset distribution.