Intergenerational top income mobility in Sweden: Capitalist dynasties in the land of equal opportunity?

This paper presents new evidence on intergenerational mobility at the top of the income and earnings distributions. Using a large dataset of matched father-son pairs in Sweden, we find that intergenerational transmission is very strong at the top, more so for income than for earnings. At the extreme top (top 0.1%) income transmission is remarkable with an intergenerational elasticity of approximately 0.9. We also study potential transmission mechanisms and find that IQ, non-cognitive skills and education of the sons are all unlikely channels in explaining the strong transmission. Within the top percentile, increases in the income of the fathers, if they are related at all, are negatively associated with these variables. Wealth, on the other hand, has a significantly positive association. Our results suggest that Sweden, known for having relatively high intergenerational mobility in general, is a society in which transmission remains strong at the very top of the distribution and wealth is the most likely channel.

► We examine intergenerational transmission of income in Sweden with focus on transmission at the very top of the distribution.
► We find very high degree of transmission from fathers to sons at the very top of the distribution.
► Using data on wealth, IQ and noncognitive skills, we find that the transmission of wealth is the most likely transmission channel.