Date of Award

2026

Document Type

Thesis

Degree Name

Bachelor of Science

Department

Mathematical Economics

First Advisor

Dr. Dean Croushore

Second Advisor

Dr. Jim Davis

Abstract

This study examines intergenerational income persistence across the income distribution, testing whether mechanisms driving inequality differ between families in the top and bottom halves of the income distribution. Using data from the National Education Longitudinal Study of 1988 (NELS:88), a nationally representative longitudinal survey of 8th grade students and their parents, this research estimates an interaction model comparing parental income effects for children in advantaged versus disadvantaged economic circumstances. The analysis reveals that a $1,000 increase in parental income yields eight times greater income gains for children in the bottom half of the distribution compared to those in the top half, confirming that intergenerational persistence is substantially stronger at lower income levels. Beyond documenting this differential persistence, the paper identifies specific mechanisms operating unequally across distributional segments. Test scores emerge as a notable mechanism, with standardized academic performance translating more directly into earnings outcomes for bottom half children than top-half children, suggesting that meritocratic processes operate differently depending on family economic status. Additionally, school urbanicity demonstrates significant heterogeneous effects, indicating that location and labor market density affect mobility prospects differently across the distribution. These findings challenge the common practice of estimating uniform intergenerational elasticity parameters and suggest that effective policy interventions aimed at promoting economic mobility must account for the heterogeneous nature of advantage and disadvantage transmission. By identifying differential mechanisms of persistence, this work provides a foundation for more targeted policy approaches that address the specific constraints binding low-income families while simultaneously examining the non-meritocratic channels through which wealth and opportunity concentrate at the top of the distribution.

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