Earnings mobility in the US: a new look at intergenerational inequality
AbstractThis study uses a new data set that contains the Social Security earnings histories of parents and children in the 1984 Survey of Income and Program Participation, to measure the intergenerational elasticity in earnings in the United States. Earlier studies that found an intergenerational elasticity of 0.4 have typically used only up to five-year averages of fathers' earnings to measure fathers' permanent earnings. However, dynamic earnings models that allow for serial correlation in transitory shocks to earnings imply that using such a short time span may lead to estimates that are biased down by nearly 30 percent. Indeed, by using many more years of fathers' earnings than earlier studies, the intergenerational elasticity between fathers and sons is estimated to be around 0.6 implying significantly less mobility in the U.S. than previous research indicated. The elasticity in earnings between fathers and daughters is of a similar magnitude. The evidence also suggests that family income has an even larger effect than fathers' earnings on children's future labor market success. The elasticity of earnings is higher for families with low net worth, offering some empirical support for theoretical models that predict differences due to borrowing constraints. Some evidence of a higher elasticity among blacks is found but the results are not conclusive.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Federal Reserve Bank of Chicago in its series Working Paper Series with number WP-01-18.
Date of creation: 2001
Date of revision:
Contact details of provider:
Postal: P.O. Box 834, 230 South LaSalle Street, Chicago, Illinois 60690-0834
Web page: http://www.chicagofed.org/
More information through EDIRC
Other versions of this item:
- Bhashkar Mazumder, 2002. "Earnings Mobility in the US: A New Look at Intergenerational Inequality," Working Papers 02-11, Center for Economic Studies, U.S. Census Bureau.
- NEP-ALL-2004-02-10 (All new papers)
- NEP-LAB-2002-02-15 (Labour Economics)
- NEP-PKE-2002-02-15 (Post Keynesian Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Couch, Kenneth A. & Lillard, Dean R., 1998. "Sample selection rules and the intergenerational correlation of earnings," Labour Economics, Elsevier, vol. 5(3), pages 313-329, September.
- Heisz, Andrew & Corak, Miles, 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.
- Miles Corak & Andrew Heisz, 1999. "The Intergenerational Earnings and Income Mobility of Canadian Men: Evidence from Longitudinal Income Tax Data," Journal of Human Resources, University of Wisconsin Press, vol. 34(3), pages 504-533.
- Lorraine Dearden & Steve Machin & Howard Reed, 1995.
"Intergenerational mobility in Britain,"
IFS Working Papers
W95/20, Institute for Fiscal Studies.
- Peters, H Elizabeth, 1992. "Patterns of Intergenerational Mobility in Income and Earnings," The Review of Economics and Statistics, MIT Press, vol. 74(3), pages 456-66, August.
- Dean R. Hyslop, 2001. "Rising U.S. Earnings Inequality and Family Labor Supply: The Covariance Structure of Intrafamily Earnings," American Economic Review, American Economic Association, vol. 91(4), pages 755-777, September.
- David Card, 1990.
"Intertemporal Labor Supply: An Assessment,"
649, Princeton University, Department of Economics, Industrial Relations Section..
- Gary S. Becker & Nigel Tomes, 1994.
"Human Capital and the Rise and Fall of Families,"
in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 257-298
National Bureau of Economic Research, Inc.
- Gary S. Becker & Nigel Tomes, . "Human Capital and the Rise and Fall of Families," University of Chicago - Population Research Center 84-10, Chicago - Population Research Center.
- 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.
- MaCurdy, Thomas E., 1982. "The use of time series processes to model the error structure of earnings in a longitudinal data analysis," Journal of Econometrics, Elsevier, vol. 18(1), pages 83-114, January.
- Behrman, Jere & Tarbman, Paul, 1985. "Intergenerational Earnings Mobility in the United States: Some Estimates and a Test of Becker's Intergenerational Endowments Model," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 144-51, February.
- Joseph G. Altonji & Thomas A. Dunn, 1991. "Relationships Among the Family Incomes and Labor Market Outcomes of Relatives," NBER Working Papers 3724, National Bureau of Economic Research, Inc.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bernie Flores).
If references are entirely missing, you can add them using this form.