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Rich Dad, Smart Dad: Decomposing the Intergenerational Transmission of Income

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  • Lars Lefgren
  • Matthew J. Lindquist
  • David Sims

Abstract

We construct a simple model, consistent with Becker and Tomes, that decomposes the intergenerational income elasticity into the causal effect of financial resources, the mechanistic transmission of human capital, and the role that human capital plays in the determination of fathers’ permanent incomes. We show how a particular set of instrumental variables could separately identify the money and human capital transmission effects. Using data from a 35 percent sample of Swedish sons and their fathers, we show that only a minority of the intergenerational income elasticity can be plausibly attributed to the causal effect of fathers’ financial resources.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 120 (2012)
Issue (Month): 2 ()
Pages: 268 - 303

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Handle: RePEc:ucp:jpolec:doi:10.1086/666590

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  1. Björklund Anders & Jäntti Markus & Solon Gary, 2007. "Nature and Nurture in the Intergenerational Transmission of Socioeconomic Status: Evidence from Swedish Children and Their Biological and Rearing Parents," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(2), pages 1-23, November.
  2. Bjorklund, Anders & Chadwick, Laura, 2003. "Intergenerational income mobility in permanent and separated families," Economics Letters, Elsevier, vol. 80(2), pages 239-246, August.
  3. Arild Aakvik & Kjell G. Salvanes & Kjell Vaage, 2005. "Educational Attainment and Family Background," German Economic Review, Verein für Socialpolitik, vol. 6(3), pages 377-394, 08.
  4. Bjorklund, Anders & Jantti, Markus, 1997. "Intergenerational Income Mobility in Sweden Compared to the United States," American Economic Review, American Economic Association, vol. 87(5), pages 1009-18, December.
  5. 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.
  6. Becker, Gary S & Tomes, Nigel, 1979. "An Equilibrium Theory of the Distribution of Income and Intergenerational Mobility," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1153-89, December.
  7. Jere R. Behrman & Mark R. Rosenzweig, 2002. "Does Increasing Women's Schooling Raise the Schooling of the Next Generation?," American Economic Review, American Economic Association, vol. 92(1), pages 323-334, March.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. ¿Qué es Mejor para mi Hijo: Mi Dinero o Mi Cerebro?
    by Alejandro Villagomez in Tintero Económico Diario on 2012-07-17 03:25:00
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Cited by:
  1. Lindahl, Mikael & Palme, Mårten & Sandgren Massih, Sofia & Sjögren, Anna, 2013. "A test of the Becker-Tomes model of human capital transmission using microdata on four generations," Research Papers in Economics 2013:2, Stockholm University, Department of Economics.
  2. Nybom, Martin & Stuhler, Jan, 2014. "Interpreting Trends in Intergenerational Mobility," Working Paper Series 3/2014, Swedish Institute for Social Research.
  3. Lindahl, Mikael & Palme, Mårten & Sandgren Massih, Sofia & Sjögren, Anna, 2012. "The intergenerational persistence of human capital: an empirical analysis of four generations," Working Paper Series 2012:12, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  4. Nybom, Martin & Stuhler, Jan, 2013. "Interpreting Trends in Intergenerational Income Mobility," IZA Discussion Papers 7514, Institute for the Study of Labor (IZA).
  5. Montserrat Vilalta-Bufi(Universitat de Barcelona) & Ausias Ribo (Universitat de Barcelona), 2012. "Educational expansion, intergenerational mobility and over-education," Working Papers in Economics 284, Universitat de Barcelona. Espai de Recerca en Economia.
  6. Tamura, Robert & Dwyer, Gerald P. & Devereux, John & Baier, Scott, 2012. "Economic growth In the long run," MPRA Paper 41324, University Library of Munich, Germany.
  7. Tor Eriksson & Jay Pan & Xuezheng Qin, 2013. "The Intergenerational Inequality of Health in China," Economics Working Papers 2013-21, School of Economics and Management, University of Aarhus.
  8. Lindahl, Mikael & Palme, Mårten & Sandgren Massih, Sofia & Sjögren, Anna, 2013. "Long-term intergenerational persistence of human capital: an empirical analysis of four generations," Research Papers in Economics 2013:3, Stockholm University, Department of Economics.
  9. Cardak, Buly A. & Johnston, David W. & Martin, Vance L., 2013. "Intergenerational earnings mobility: A new decomposition of investment and endowment effects," Labour Economics, Elsevier, vol. 24(C), pages 39-47.

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