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Estimating the Intergenerational Correlation of Incomes: An Errors in Variables Framework Author info | Abstract | Publisher info | Download info | Related research | Statistics Ramses H. Abul Naga
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The estimation of the intergenerational correlation of incomes is usually carried out by proxying permanent incomes using suitable indicators of economic status, and by treating the resulting measurement error problem using averaging or instrumenting procedures. Here we take the permanent income of the parents' family to be unobserved, but we assume that its determinants are known to the researcher. A two-stage procedure as well as a MIMIC type covariance estimator applied to a US sample of parents and children entail estimates of the order of 0.61 to 0.64 for the coefficient of intergenerational income transmission. OLS estimates this parameter at 0.5. The variance ratio of permanent to total income is also estimated to be in the range of 0.77 to 0.8, implying a correction factor of 1.25 to 1.3 for OLS estimates.
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Paper provided by Suntory and Toyota International Centres for Economics and Related Disciplines, LSE in its series STICERD - Distributional Analysis Research Programme Papers with number
44.
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Date of creation: Jul 1999Date of revision:
Handle: RePEc:cep:stidar:44Contact details of provider: Web page: http://sticerd.lse.ac.uk/_new/publications/default.asp
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Keywords: Intergenerational mobility ; errors in variables ; Other versions of this item:
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[Downloadable!] (restricted)
Ramses ABUL NAGA & Jaya KRISHNAKUMAR, 1999.
"Panel Data Estimation of the Intergenerational Correlation of Incomes ,"
Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP)
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[Downloadable!] (restricted)
Ramses H. ABUL NAGA, 2001.
"Biases of the Ordinary Least Squares and Instrumental Variables Estimators of the Intergenerational Earnings Correlation : Revisited in the Light of Panel Data ,"
Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP)
01.05, Université de Lausanne, Faculté des HEC, DEEP.
[Downloadable!]
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