There is a lot of criticism on Indian society for lack of inter-generation mobility. But pretty much similar things exist in western societies as well.
Societies characterised by a high transmission of socioeconomic status across generations are not only more likely to be perceived as ‘unfair’, they may also be less efficient as they waste the skills of those coming from disadvantaged backgrounds. Existing evidence suggests that the related earnings advantages disappear after several generations. This column challenges this view by comparing tax records for family dynasties (identified by surname) in Florence, Italy in 1427 and 2011. The top earners among the current taxpayers were found to have already been at the top of the socioeconomic ladder six centuries ago. This persistence is identified despite the huge political, demographic, and economic upheavals that occurred between the two dates.
One might wonder whether these results can be generalised to other societies. Florence does not seem a polar case in terms of economic development and (static and dynamic) inequality. Hence, we argue that our results can be thoughtfully extended to other advanced countries of the Western Europe.
We also find two further interesting pieces of evidence. First, we show that intergenerational mobility in the 15th century was much lower than at present – the intergenerational earnings elasticity between two successive generations was estimated to be between 0.8 and 0.9, thus depicting a quasi-immobile society in 1427. It is plausible, though we do not have direct evidence for this, that earning elasticity was close to 1 until the 20th century (before the Italian industrial revolution and mass schooling) and lower in the subsequent period. This may explain why we still find some degree of inheritance of socioeconomic status after six centuries.
Second, we find evidence of dynasties in certain (elite) professions – the probability of belonging to such professions (lawyers, bankers, medical doctor or pharmacist, goldsmiths) today is higher the more intensely the pseudo-ancestors were employed in the same professions. This latter result is consistent with our baseline evidence on the long-run persistence of socioeconomic status, particularly at the top of the economic ladder. Moreover, it also highlights a potential channel of inheritance, related to the market and non-market mechanisms governing access to certain professions.