This paper presents new evidence on intergenerational income and earnings mobility in the top of the distributions. Using a large dataset of matched father-son pairs in Sweden we are able to obtain results for fractions as small as 0.1 percent of the population. Overall, mobility is lower for incomes than for earnings and it appears to decrease the higher up in the distribution one goes. In the case of incomes, however, we find that mobility decreases dramatically within the top percentile of the population. Our results suggest that Sweden, well-known for its egalitarian achievements, is a society where equality of opportunity for a large majority of wage earners coexists with capitalistic dynasties.
For fathers with incomes in the top 0.1 percentile, we estimate a coefficient of 0.827 with a standard error as low as 0.099. Taken at face value, this coefficient implies that a 10 percent income differential among high-income fathers is transmitted into an 8.3 percent differential among sons.
... it is crucial to study small fractions in the top of the distribution to get a clear picture of income mobility. Discussing “the top” as consisting of the top 20, or top 10, or even the top 5 percent, runs the risk of missing important aspects. Indeed, our most striking results do not show until within the top percentile.
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