In game two of last fall’s American League baseball championship, 56,000 crazed New York Yankee fans taunted Boston Red Sox ace pitch- er, Pedro Martinez, by chanting, as only leather-lunged New Yorkers can do, ”œWho’s your daddy? Who’s your daddy?” as Martinez lost to the New York team 3-1. This was not really an inquiry about paternity: After giving up a tough loss to the Bronx Bombers late in the regular season, Martinez had unwisely conceded that the Yankees were playing so well that, for the time being, they were his daddy. As everyone not in a coma now knows, the Red Sox proved who was really daddy by sweeping the final four games of the seven-game series and then going on to take the World Series from the St Louis Cardinals, their first Series win since 1918.
”œWho’s your daddy?” is thus now a canonical baseball phrase. But it has long been key in the social sciences. How much parenthood counts has always been one of the basic indicators of how fair a society is. Whether for reasons of nature or nurture, who your daddy is inevitably determines a lot about who you are. But if it also guar- antees your place in the income distri- bution, most people would consider that a sign of a pretty unfair society. Aristocracy has its virtues but these days most people favour meritocracy.
So how fair a society is contempo- rary Canada? On a scale of zero to ten, with zero indicating no effect at all of parental income on children’s income and ten representing over-riding parental influence, so that sons and daughters assume exactly the same place in the income distribution as their parents, where do you suppose we rank?
Actually, we rank pretty well. On the 0-10 scale we come in at about 2 (1.9 to be exact). Denmark beats us out, at 1.5. (Here, as in golf, a lower score is better.) But we do much better than two natural comparators, the US (4.7) and UK (5.0).
The UK has always had a reputation as a society with an entrenched class system in which people inherit their station in life. (Prince Charles was recently throttled in the press for arguing that may not be such a bad thing.) So to me the truly surprising score is the US’s. Since de Tocqueville America has had a reputation as a place where if you build a better mousetrap (or, these days, mouse), then no matter what your background you can become rich beyond belief. But despite the US’s renowned open- ness ”” a poor Austrian boy is now the multi-millionaire governor of California ”” on average there’s sub- stantial income carry-over from one generation to another.
These numbers aren’t pulled out of the blue. They are measures of the intergenerational elasticity of income. I first read about them in a paper by Miles Corak of Statistics Canada in the IRPP volume The Review of Economic Performance and Social Progress, edited by Keith Banting, Andrew Sharpe and France St-Hilaire, which came out in 2001. The elasticity is calculated by correlating children’s incomes with their parents’ incomes. If one father’s income is 100 percent of another father’s, then an intergenerational income elasticity of 0.19 (Canada’s score on a 0-1, rather than a 0-10 scale) means their son’s incomes are just 19 percent apart. The US’s score (0.47 on the 0-1 scale, 4.7 out of 10 on the 0-10 scale) means the son’s incomes would still be 47 percent apart.
Corak now has an important new book out with Cambridge University Press (Generational Income Mobility in North America and Europe). It brings together papers by some of the top researchers in the world on this subject. His introduction to the book is titled ”œDo poor children become poor adults?”, which gets right to the nub of the key policy question. It seems reasonably clear from his own data that in this coun- try poor children don’t become poor adults. That’s an important lesson because we’re about to embark on a national program ”” or at least a nationally financed, or directed, or co-ordinated, or initiated ”” program of early childhood education whose premise is that poor kids are pretty much condemned to become poor adults. Corak’s numbers suggest that’s just not true.
But, you might say, there’s still a 19 percent correlation between parents’ and kids’ incomes. Except that if genet- ics count for anything, and they must count for something, there’s bound to be some irreducible non-zero correla- tion we’ll never get rid of. So 19 percent may be as low as we can practically go. Can a massive new social program real- ly drive it down much further?
Of course, the flip side of our 19 percent score is that we must be doing a lot of things right, especial- ly in comparison to the US’s 47 per- cent. Now, there may be problems with the US number. Corak argues it’s the best estimate for the US but it is only one of 41 estimates. (One thing US society does not lack is study.) Still, our stellar showing in the ”œwho’s your daddy?” sweep- stakes gives pause even to a rock- ribbed conservative.