Estimating Intergenerational Income Mobility in Indonesia

Abstract

This study estimates the intergenerational income mobility in Indonesia using data from the 1^st, 2^nd, 3^rd, and 5^th of the Indonesian Family Life Survey (IFLS). Intergenerational income mobility is proxied by intergenerational elasticity, which measures the correlation between parents and their children’s incomes. Intergenerational elasticity is also regarded as a measure of equality of opportunity. The estimates in this study suggest that intergenerational elasticity for father-son pairs in Indonesia is between 0.44 and 0.50. Compared to other ASEAN countries, Indonesia is less mobile than Singapore but more mobile than Malaysia. Further analyses of the income mobility matrix indicate relatively low mobility for individuals in the upper-income quartile and medium mobility for individuals in the lower-income quartile.