Heritability of income

International comparisions ahoy.

The elasticity of a man’s income with respect to his father’s is about 0.2 for the Nordic countries, 0.36 for Britain, and 0.54 for the United States. In case the jargon is new to you, this means that if you start from a particular mark like $20,000 or $50,000 a year, every additional $1,000 step in the father’s income translated into an increase in the son’s later income of $200 in the Nordic countries, $360 in Britain and as much as $540 in the United States.

It would help if the blogger’s helpful explanation of the term “elasticity” were correct. The estimates mean, for example, that a 10% increase in father’s income is associated with a 5.4% increase in son’s income, in the United States.