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How do Education, Cognitive Skills, Cultural and Social Capital Account for Intergenerational Earnings Persistence? Evidence from the Netherlands

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Author Info

  • Büchner Charlotte
  • Cörvers Frank
  • Traag Tanja
  • Velden Rolf van der

    (METEOR)

Abstract

This study analyzes four different transmission mechanisms, through which father’s earnings affectson’s earnings: the educational attainment, cognitive skills, the cultural capital of the familyand the social capital in the neighborhood. Using a unique data set that combines panel data froma birth cohort with earnings data from a large nationwide income survey and national tax files,our findings show that cognitive skills and schooling of the son account for 50% of the father-sonearnings elasticity. Education by far accounts for the largest part, while cognitive skills mainlywork indirectly through educational attainment. Social capital of the neighborhood and culturalcapital of the parents account for an additional 6% of the intergeneration income persistence.From these two additional mechanisms, social capital appears to play a stronger role than thecultural capital of the parents. This means that 44% of the intergenerational persistence is dueto other unobserved characteristics for example personality traits or spillover effects of familyassets.

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Bibliographic Info

Paper provided by Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization in its series Research Memoranda with number 028.

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Date of creation: 2012
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Handle: RePEc:dgr:umamet:2012028

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Web page: http://www.maastrichtuniversity.nl/web/UMPublications.htm

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Keywords: education; training and the labour market;

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  1. Grawe, Nathan D., 2003. "Life Cycle Bias in the Estimation of Intergenerational Earnings Persistence," Analytical Studies Branch Research Paper Series 2003207e, Statistics Canada, Analytical Studies Branch.
  2. Lorraine Dearden & Steve Machin & Howard Reed, 1995. "Intergenerational mobility in Britain," IFS Working Papers W95/20, Institute for Fiscal Studies.
  3. Eric A. Hanushek & Ludger Wößmann, 2005. "Does Education Tracking Affect Performance and Inequality? Differences-In-Differences Evidence Across Countries," Discussion Papers 04-026, Stanford Institute for Economic Policy Research.
  4. Corak, Miles Heisz, Andrew, 1998. "The Intergenerational Earnings and Income Mobility of Canadian Men: Evidence from Longitudinal Income Tax Data," Analytical Studies Branch Research Paper Series 1998113e, Statistics Canada, Analytical Studies Branch.
  5. James J. Heckman & Jora Stixrud & Sergio Urzua, 2006. "The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior," NBER Working Papers 12006, National Bureau of Economic Research, Inc.
  6. Bhashkar Mazumder, 2001. "Earnings mobility in the US: a new look at intergenerational inequality," Working Paper Series WP-01-18, Federal Reserve Bank of Chicago.
  7. Rauch James E., 1993. "Productivity Gains from Geographic Concentration of Human Capital: Evidence from the Cities," Journal of Urban Economics, Elsevier, vol. 34(3), pages 380-400, November.
  8. Nybom, Martin & Stuhler, Jan, 2011. "Heterogeneous Income Profiles and Life-Cycle Bias in Intergenerational Mobility Estimation," IZA Discussion Papers 5697, Institute for the Study of Labor (IZA).
  9. Grawe, Nathan D., 2006. "Lifecycle bias in estimates of intergenerational earnings persistence," Labour Economics, Elsevier, vol. 13(5), pages 551-570, October.
  10. Jo Blanden & Paul Gregg & Lindsey MacMillan, 2007. "Accounting for Intergenerational Income Persistence: Noncognitive Skills, Ability and Education," School of Economics Discussion Papers 0307, School of Economics, University of Surrey.
  11. 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.
  12. Lindh, Thomas & Ohlsson, Henry, 1996. "Self-Employment and Windfall Gains: Evidence from the Swedish Lottery," Economic Journal, Royal Economic Society, vol. 106(439), pages 1515-26, November.
  13. Jo Blanden, 2009. "How Much Can We Learn from International Comparisons of Intergenerational Mobility?," CEE Discussion Papers 0111, Centre for the Economics of Education, LSE.
  14. Yannis M. Ioannides & Linda Datcher Loury, 2004. "Job Information Networks, Neighborhood Effects, and Inequality," Journal of Economic Literature, American Economic Association, vol. 42(4), pages 1056-1093, December.
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  1. Weekly Roundup 187: A Curated Linkfest For The Smartest People On The Web!
    by Miguel in Simoleon Sense on 2012-09-30 15:45:50

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