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Explaining Intergenerational Income Persistence: Non-cognitive Skills, Ability and Education

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  • Jo Blanden
  • Paul Gregg
  • Lindsey Macmillan

    ()

Abstract

The recent literature on intergenerational mobility in the UK has been focused on measuring the level and change in the relationship between parental income and children’s earnings as adults among recent cohorts. This paper is the first to analyse in detail the factors that generate these links. The paper seeks to account for the level of income persistence in the 1970 BCS cohort and also to explore the decline in mobility in the UK between the 1958 NCDS cohort and the 1970 cohort. The mediating factors considered are childhood health, cognitive skills, non-cognitive traits, educational attainment and labour market attachment. We find that these variables together explain slightly more than half of the intergenerational link for men. Changes in the relationships between these variables, parental income and earnings are able to explain three quarters of the rise in intergenerational persistence across the cohorts. The increased persistence in the second cohort comes from an increased influence of parental income in determining educational attainment, especially higher education, and labour market attachment. It is also clear that the stronger relationship between parental income and education comes in part through the growing relationship between parental income and the non-cognitive characteristics that influence education outcomes.

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File URL: http://www.bris.ac.uk/Depts/CMPO/workingpapers/wp146.pdf
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Bibliographic Info

Paper provided by Department of Economics, University of Bristol, UK in its series The Centre for Market and Public Organisation with number 06/146.

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Length: 18 pages
Date of creation: Apr 2006
Date of revision:
Handle: RePEc:bri:cmpowp:06/146

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Keywords: Intergenerational Mobility; Earnings; Family Income; Education;

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References

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  1. Sandra E. Black & Paul J. Devereux & Kjell G. Salvanes, 2006. "From the cradle to the labor market? The effect of birth weight on adult outcomes," LSE Research Online Documents on Economics 19425, London School of Economics and Political Science, LSE Library.
  2. James Heckman & Pedro Carneiro, 2003. "Human Capital Policy," NBER Working Papers 9495, National Bureau of Economic Research, Inc.
  3. Yona Rubinstein & James J. Heckman, 2001. "The Importance of Noncognitive Skills: Lessons from the GED Testing Program," American Economic Review, American Economic Association, vol. 91(2), pages 145-149, May.
  4. Nicola Persico & Andrew Postlewaite & Dan Silverman, 2003. "The Effect of Adolescent Experience on Labor Market Outcomes: The Case of Height," PIER Working Paper Archive 03-036, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  5. James J. Heckman & Jora Stixrud & Sergio Urzua, 2006. "The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior," Journal of Labor Economics, University of Chicago Press, vol. 24(3), pages 411-482, July.
  6. Dearden, Lorraine & Machin, Stephen & Reed, Howard, 1997. "Intergenerational Mobility in Britain," Economic Journal, Royal Economic Society, vol. 107(440), pages 47-66, January.
  7. Jo Blanden & Stephen Machin, 2004. "Educational Inequality and the Expansion of UK Higher Education," Scottish Journal of Political Economy, Scottish Economic Society, vol. 51(2), pages 230-249, 05.
  8. Stevens, Ann Huff, 1997. "Persistent Effects of Job Displacement: The Importance of Multiple Job Losses," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 165-88, January.
  9. Pedro Carneiro & Claire Crawford & Alissa Goodman, 2006. "Which skills matter?," LSE Research Online Documents on Economics 19428, London School of Economics and Political Science, LSE Library.
  10. Melissa Osborne & Herbert Gintis & Samuel Bowles, 2001. "The Determinants of Earnings: A Behavioral Approach," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1137-1176, December.
  11. Singh, S K & Maddala, G S, 1976. "A Function for Size Distribution of Incomes," Econometrica, Econometric Society, vol. 44(5), pages 963-70, September.
  12. Gary Solon, 2002. "Cross-Country Differences in Intergenerational Earnings Mobility," Journal of Economic Perspectives, American Economic Association, vol. 16(3), pages 59-66, Summer.
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Cited by:
  1. Nattavudh Powdthavee & Anna Vignoles, 2008. "Mental Health of Parents and Life Satisfaction of Children: A Within-Family Analysis of Intergenerational Transmission of Well-Being," Social Indicators Research, Springer, vol. 88(3), pages 397-422, September.
  2. Janet Currie, 2009. "Healthy, Wealthy, and Wise: Socioeconomic Status, Poor Health in Childhood, and Human Capital Development," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 87-122, March.
  3. Datta Gupta, Nabanita & Lausten, Mette & Pozzoli, Dario, 2012. "Does Mother Know Best? Parental Discrepancies in Assessing Child Functioning," IZA Discussion Papers 6962, Institute for the Study of Labor (IZA).
  4. Frijters, Paul & Johnston, David W. & Shields, Michael A., 2011. "Destined for (Un)Happiness: Does Childhood Predict Adult Life Satisfaction?," IZA Discussion Papers 5819, Institute for the Study of Labor (IZA).
  5. Powdthavee, Nattavudh & Stutzer, Alois, 2014. "Economic Approaches to Understanding Change in Happiness," IZA Discussion Papers 8131, Institute for the Study of Labor (IZA).
  6. Pfeiffer, Friedhelm & Reuß, Karsten, 2008. "Age-dependent skill formation and returns to education," Labour Economics, Elsevier, vol. 15(4), pages 631-646, August.
  7. Paul Gregg & Katharina Janke & Carol Propper, 2008. "Handedness and Child Development," The Centre for Market and Public Organisation 08/198, Department of Economics, University of Bristol, UK.
  8. Janet Currie & Mark Stabile, 2007. "Mental Health in Childhood and Human Capital," NBER Working Papers 13217, National Bureau of Economic Research, Inc.

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