Corruption and calcified hierarchies

: how institutional quality shapes intergenerational mobility in Italy

Abstract

We estimate intergenerational mobility in Italy and examine the role of corruption in observed mobility patterns. Using cross-sectional data from the Bank of Italy's Survey on Household Income and Wealth (SHIW) spanning 2004-2022, we first establish baseline mobility estimates across educational, occupational, and income dimensions. Given the lack of parental income information we employ Two-Sample Two-Stage Least Squares (TSTSLS) to impute fathers' income from retrospective characteristics reported by sons. Then, to identify corruption's causal impact on educational mobility, we employ Two-Stage Least Squares (2SLS) methodology, instrumenting corruption with regional cheating indicators and between-class test score variability. To investigate the underlying transmission mechanisms, we use multinomial logistic models through which corruption's effects on occupational inheritability and education devaluation are tested. Results show substantial intergenerational persistence: our corrected income elasticity estimate indicates that 38% of income advantages are transmitted across generations, while the rank-rank slope of 0.362 implies children from top-decile families rank 29 percentiles higher than those from bottom-decile families. Examining corruption's role, we find it strengthens the intergenerational transmission of education. A one standard deviation increase in corruption reduces educational attainment by 1.02 years for children from uneducated families, while each additional year of parental education offsets this effect by 0.056 years. Investigating the underlying transmission mechanisms, we find corruption increases occupational inheritability, primarily protecting elite status and devalues education as a mobility tool.

Date of Award	10 Jul 2025
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Joana Silva (Supervisor)