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Intergenerational mobility and sample selection in short panels

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Author Info
Cheti Nicoletti (Institute for Social and Economic Research, University of Essex, Colchester, UK)
Marco Francesconi (Department of Economics, University Essex, Colchester, UK)

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Abstract

Using data from the first 11 waves of the BHPS, this paper measures the extent of the selection bias induced by standard coresidence conditions-bias that is expected to be severe in short panels-on measures of intergenerational mobility in occupational prestige. We try to limit the impact of other selection biases, such as those induced by labour market restrictions that are typically imposed in intergenerational mobility studies, by using different measures of socio-economic status that account for missing labour market information. We stress four main results. First, there is evidence of an underestimation of the true intergenerational elasticity, the extent of which ranges between 12% and 39%. Second, the proposed methods used to correct for the selection bias seem to be unable to attenuate it, except for the propensity score weighting procedure, which performs well in most circumstances. This result is confirmed both under the assumption of missing-at-random data as well as under the assumption of not-missing-at-random data. Third, the two previous sets of results (direction and extent of the bias, and differential abilities to correct for it) are also robust when we account for measurement error. Fourth, restricting the sample to a period shorter than the 11 waves under analysis leads to a severe sample selection bias. In the cases when the analysis is limited to eight waves, this bias ranges from about 40% to 65%. Copyright © 2006 John Wiley & Sons, Ltd.

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Article provided by John Wiley & Sons, Ltd. in its journal Journal of Applied Econometrics.

Volume (Year): 21 (2006)
Issue (Month): 8 ()
Pages: 1265-1293
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Handle: RePEc:jae:japmet:v:21:y:2006:i:8:p:1265-1293

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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. Couch, Kenneth A. & Lillard, Dean R., 1998. "Sample selection rules and the intergenerational correlation of earnings," Labour Economics, Elsevier, vol. 5(3), pages 313-329, September. [Downloadable!] (restricted)
  2. Becker, Gary S & Tomes, Nigel, 1986. "Human Capital and the Rise and Fall of Families," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages S1-39, July. [Downloadable!] (restricted)
    Other versions:
  3. Goldberger, Arthur S, 1989. "Economic and Mechanical Models of Intergenerational Transmission," American Economic Review, American Economic Association, vol. 79(3), pages 504-13, June. [Downloadable!] (restricted)
  4. Shea, John, 2000. "Does parents' money matter?," Journal of Public Economics, Elsevier, vol. 77(2), pages 155-184, August. [Downloadable!] (restricted)
  5. Ermisch, John & Di Salvo, Pamela, 1997. "The Economic Determinants of Young People's Household Formation," Economica, London School of Economics and Political Science, vol. 64(256), pages 627-44, November. [Downloadable!] (restricted)
  6. Peter Gottschalk & John Fitzgerald & Robert Moffitt, 1997. "An Analysis of the Impact of Sample Attrition on the Second Generation of Respondents in the Michigan Panel Study of Income Dynamics," Boston College Working Papers in Economics 399, Boston College Department of Economics. [Downloadable!]
  7. Robert Erikson & John H. Goldthorpe, 2002. "Intergenerational Inequality: A Sociological Perspective," Journal of Economic Perspectives, American Economic Association, vol. 16(3), pages 31-44, Summer. [Downloadable!] (restricted)
  8. Chesher, Andrew & Irish, Margaret, 1987. "Residual analysis in the grouped and censored normal linear model," Journal of Econometrics, Elsevier, vol. 34(1-2), pages 33-61. [Downloadable!] (restricted)
  9. Solon, Gary, 1999. "Intergenerational mobility in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 29, pages 1761-1800 Elsevier. [Downloadable!] (restricted)
  10. Bhashkar Mazumder, 2005. "Fortunate Sons: New Estimates of Intergenerational Mobility in the United States Using Social Security Earnings Data," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 235-255, 07. [Downloadable!] (restricted)
  11. Laura Chadwick & Gary Solon, 2002. "Intergenerational Income Mobility Among Daughters," American Economic Review, American Economic Association, vol. 92(1), pages 335-344, March. [Downloadable!]
  12. Goldberger, A.S., 1989. "Economic And Mechanical Models Of Intergenerational Transmission," Working papers 374, Wisconsin Madison - Social Systems.
  13. Haurin Donald R. & Hendershott Patric H. & Kim Dongwook, 1994. "Housing Decisions of American Youth," Journal of Urban Economics, Elsevier, vol. 35(1), pages 28-45, January. [Downloadable!] (restricted)
  14. Lee, Lung-Fei, 1984. "Tests for the Bivariate Normal Distribution in Econometric Models with Selectivity," Econometrica, Econometric Society, vol. 52(4), pages 843-63, July. [Downloadable!] (restricted)
  15. Marianne E. Page & Gary Solon, 2003. "Correlations between sisters and neighbouring girls in their subsequent income as adults," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(5), pages 545-562. [Downloadable!]
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  1. repec:ese:iserwp: is not listed on IDEAS
  2. repec:bep:eapcon:v:7:y:2007:i:2:p:1794-1794 is not listed on IDEAS
  3. Bratti, Massimiliano & Checchi, Daniele & de Blasio, Guido, 2008. "Does the Expansion of Higher Education Increase the Equality of Educational Opportunities? Evidence from Italy," IZA Discussion Papers 3361, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  4. repec:bep:eapcon:v:7:y:2008:i:2:p:1755-1755 is not listed on IDEAS
  5. Maribel Jimenez & Monica Jimenez, 2009. "La Movilidad Intergeneracional del Ingreso: Evidencia para Argentina," Working Papers 0084, CEDLAS, Universidad Nacional de La Plata. [Downloadable!]
  6. Sayema H. Bidisha, . "Intergenerational Earnings Mobility of Immigrants and Ethnic Minorities in the UK," Discussion Papers 09/10, University of Nottingham, GEP. [Downloadable!]
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