A Copula-Based Framework for Studying Intergenerational Income Mobility

The sociological analysis of the mobility tables enhances the examination of the circulation mobility and helps one reveal the nuanced morphological patterns of mobility. In contrast, the economic analysis based on the measure of elasticity provides a handy way of covariate conditioning and statistically testing the similarities of mobility patterns across groups. In this article, we argue that the distinct methodological merits of these two approaches can be equipped by adopting a more comprehensive analytical framework using the copula functions: (1) The copula functions concern the dependence structure that is independent from the margins, which enable scholars to focus on the relative mobility; (2) The copula density, estimated either parametrically or non-parametrically, reveals the nuanced morphological mobility patterns; (3) By residualizing the marginal variables, the detected mobility pattern can be interpreted in a stronger causal sense; and (4) the Cramér–von Mises Test offers an easy-to-use statistic to conduct intergroup comparison of mobility patterns. The copula-based framework is illustrated by investigating the income mobility between 1978 and 2017 in the U.S., using the National Longitudinal Survey of Youth 1979 (NLSY79).