Who Gets Ahead? Measuring Income Gaps across Family Backgrounds

Abstract

Measuring income gaps across family backgrounds is crucial for evaluating inequality and informing policy. I develop a multidimensional approach and apply it to Dutch administrative data with exceptionally rich information on parents and extended family. This approach reveals strikingly larger income gaps than standard intergenerational mobility measures, particularly among the most disadvantaged children. A novel decomposition shows that income gaps are largest along parental and extended family income and wealth, though other characteristics matter greatly for specific subgroups. Neighborhoods contribute modestly. Evidence from adoptees suggests that pre-birth factors are an important driver of the observed disparities.