Intergenerational Mobility, Inequality, and Entrepreneurship along the Path of Development

A society where individuals can pursue their dreams, striving to become whatever they desire, excels both in efficiency and equity. However, throughout history, following parents' occupations was the norm, changing social class an exception. The question remains: what caused the increase in social mobility? My research program aims to answer these questions with three interconnected projects. Project I tackles the main obstacle to studying mobility: the availability of long-run individual-level panel data of parents and children. Digitizing an overlooked series of historical books, I will build a unique dataset of incomes and occupations of the universe of Swedish taxpayers since 1905, matched with panel data of firms with their revenue, payroll, and top executives since 1857. The novelty lies in the universal coverage of data, spanning the birth of prosperous, innovative, and inclusive Sweden with an advanced welfare state.Project II leverages this comprehensive dataset to establish stylized facts about mobility in labor and capital incomes, as well as in occupation and entrepreneurship. They will shed light on the long-run patterns of mobility and its associations with inequality and growth, resolve long-standing controversies, and bring new insights into the debate. Project III develops a novel theoretical model of mobility that uncovers the drivers of mobility. The model shows that social mobility is driven by the tension between opportunities for social climbers to access physical and human capital and the privileges of the elite to hinder such access. We exploit quasi-experimental evidence to test this theory, using the expansion of private banks and public education, as well as the rise and fall of progressive taxation. Together, the projects build micro-founded connections between mobility, inequality, and growth. The drivers of mobility we uncover may bolster both mobility and growth, challenging the traditional efficiency and equity trade-off.