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Intergenerational Persistence of Earnings: The Role of Early and College Education

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Author Info
Diego Restuccia
Carlos Urrutia

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Abstract

Recent empirical evidence from the United States indicates a high degree of persistence in earnings across generations. Designing effective public policies to increase social mobility requires identifying and measuring the major sources of persistence and inequality in earnings. We provide a quantitative model of intergenerational human capital transmission that focuses on three sources: innate ability, early education, and college education. We find that approximately one-half of the intergenerational correlation in earnings is accounted for by parental investment in education, in particular early education. We show that these results have important implications for education policy.

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Publisher Info
Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 94 (2004)
Issue (Month): 5 (December)
Pages: 1354-1378
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Handle: RePEc:aea:aecrev:v:94:y:2004:i:5:p:1354-1378

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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Elizabeth M. Caucutt & Lance Lochner, 2005. "Borrowing constraints on families with young children," Proceedings, Federal Reserve Bank of Cleveland, pages 39-48. [Downloadable!]
  2. Tuomas Pekkarinen & Roope Uusitalo & Sari Pekkala, 2006. "Education Policy and Intergenerational Income Mobility: Evidence from the Finnish Comprehensive School Reform," IZA Discussion Papers 2204, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  3. Michele Bernasconi & Paola Profeta, 2007. "Redistribution or Education? The Political Economy of the Social Race," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
  4. Greenwood, Jeremy & Guner, Nezih, 2008. "Social Change," IZA Discussion Papers 3485, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  5. Christiane Schuppert, 2007. "Does mobility of educated workers undermine decentralized education policies?," Discussion Papers in Economics 07_01, University of Dortmund, Department of Economics. [Downloadable!]
  6. Andres Erosa & Tatyana Koreshkova & Diego Restuccia, 2006. "On the aggregate and distributional implications of productivity differences across countries," Working Paper 06-02, Federal Reserve Bank of Richmond. [Downloadable!]
  7. Sumon Kumar Bhaumik & Manisha Chakrabarty, 2007. "Is Education the Panacea for Economic Deprivation of Muslims? Evidence from Wage Earners in India, 1987-2004," William Davidson Institute Working Papers Series wp858, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
    Other versions:
  8. Christoph Winter, 2007. "Accounting for the Changing Role of Family Income in Determining College Entry," Economics Working Papers ECO2007/49, European University Institute. [Downloadable!]
  9. Carlos Garriga & Mark P. Keightley, 2007. "A general equilibrium theory of college with education subsidies, in-school labor supply, and borrowing constraints," Working Papers 2007-051, Federal Reserve Bank of St. Louis. [Downloadable!]
  10. Todd R. Stinebrickner & Ralph Stinebrickner, 2007. "The Effect of Credit Constraints on the College Drop-Out Decision A Direct Approach Using a New Panel Study," NBER Working Papers 13340, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  11. Holmlund, Helena, 2006. "Intergenerational Mobility and Assortative Mating. Effects of an Educational Reform," Working Paper Series 4/2006, Swedish Institute for Social Research. [Downloadable!]
  12. Nikos Benos, . "Education Systems, Growth and Welfare," University of Cyprus Working Papers in Economics 5-2005, University of Cyprus Department of Economics. [Downloadable!]
  13. Zol Alexei Hooper & E. Anthon Eff, . "Social Mobility in the United States as a Markov Process," Journal for Economic Educators, Middle Tennessee State University, Business and Economic Research Center. [Downloadable!]
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