Empirical Strategies to Eliminate Life-Cycle Bias in the Intergenerational Elasticity of Earnings Literature
AbstractI argue that the empirical strategies for estimation of the intergenerational elasticity of lifetime earnings that are currently employed in the literature might not eliminate bias arising from life-cycle effects. Specifically, I demonstrate that procedures based on the generalized errors-in-variables model suggested by Haider and Solon (2006) or the consideration of differential earnings growth rates across subpopulations may not yield unbiased or consistent estimates. I further argue that instrumental variable estimators will not identify an upper bound for the true population parameter.
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Bibliographic InfoPaper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 346.
Length: 31 p.
Date of creation: 2010
Date of revision:
intergenerational mobility; intergenerational elasticity of earnings; life-cycle bias; generalized errors-in-variables model;
Other versions of this item:
- Stuhler, Jan, 2010. "Empirical Strategies to Eliminate Life-Cycle Bias in the Intergenerational Elasticity of Earnings Literature," IZA Discussion Papers 5245, Institute for the Study of Labor (IZA).
- J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
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- Anders Björklund & Mikael Lindahl & Erik Plug, 2006.
"The Origins of Intergenerational Associations: Lessons from Swedish Adoption Data,"
The Quarterly Journal of Economics,
MIT Press, vol. 121(3), pages 999-1028, 08.
- Björklund, Anders & Lindahl, Mikael & Plug, Erik, 2005. "The Origins of Intergenerational Associations: Lessons from Swedish Adoption Data," IZA Discussion Papers 1739, Institute for the Study of Labor (IZA).
- Björklund, Anders & Jäntti, Markus & Lindquist, Matthew J., 2009.
"Family background and income during the rise of the welfare state: Brother correlations in income for Swedish men born 1932-1968,"
Journal of Public Economics,
Elsevier, vol. 93(5-6), pages 671-680, June.
- Björklund, Anders & Jäntti, Markus & Lindquist, Matthew J., 2007. "Family Background and Income during the Rise of the Welfare State: Brother Correlations in Income for Swedish Men Born 1932-1968," IZA Discussion Papers 3000, Institute for the Study of Labor (IZA).
- Nilsen, Øivind Anti & Vaage, Kjell & Aakvik, Arild & Jacobsen, Karl, 2008. "Estimates of Intergenerational Elasticities Based on Lifetime Earnings," IZA Discussion Papers 3709, Institute for the Study of Labor (IZA).
- María Cervini Plá, 2009. "Measuring intergenerational earnings mobility in Spain: A selection-bias-free," Working Papers wpdea0904, Department of Applied Economics at Universitat Autonoma of Barcelona.
- Manudeep Bhuller & Magne Mogstad & Kjell G.Salvanes, 2011.
"Life-cycle bias and the returns to schooling in current and lifetime earnings,"
666, Research Department of Statistics Norway.
- Bhuller, Manudeep & Mogstad, Magne & Salvanes, Kjell G., 2011. "Life-Cycle Bias and the Returns to Schooling in Current and Lifetime Earnings," IZA Discussion Papers 5788, Institute for the Study of Labor (IZA).
- 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).
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